Correlation Between Life Time and Wendys
Can any of the company-specific risk be diversified away by investing in both Life Time and Wendys at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Life Time and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Time Group and The Wendys Co, you can compare the effects of market volatilities on Life Time and Wendys and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Life Time with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Wendys.
Diversification Opportunities for Life Time and Wendys
Significant diversification
The 3 months correlation between Life and Wendys is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Life Time is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Life Time Group are associated (or correlated) with Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of Life Time i.e., Life Time and Wendys go up and down completely randomly.
Pair Corralation between Life Time and Wendys
Considering the 90-day investment horizon Life Time Group is expected to generate 1.25 times more return on investment than Wendys. However, Life Time is 1.25 times more volatile than The Wendys Co. It trades about 0.16 of its potential returns per unit of risk. The Wendys Co is currently generating about 0.0 per unit of risk. If you would invest 1,478 in Life Time Group on September 3, 2024 and sell it today you would earn a total of 949.00 from holding Life Time Group or generate 64.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. The Wendys Co
Performance |
| Timeline |
| Life Time Group |
| The Wendys |
Life Time and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Wendys
The main advantage of trading using opposite Life Time and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, Wendys can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wendys will offset losses from the drop in Wendys' long position.| Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Mattel Inc | Life Time vs. OneSpaWorld Holdings |
| Wendys vs. Highway Holdings Limited | Wendys vs. QCR Holdings | Wendys vs. Partner Communications | Wendys vs. Acumen Pharmaceuticals |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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