Correlation Between Las Vegas and Wendys
Can any of the company-specific risk be diversified away by investing in both Las Vegas 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 Las Vegas and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Las Vegas Sands and The Wendys Co, you can compare the effects of market volatilities on Las Vegas 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 Las Vegas with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and Wendys.
Diversification Opportunities for Las Vegas and Wendys
Poor diversification
The 3 months correlation between Las and Wendys is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Las Vegas 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 Las Vegas Sands 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 Las Vegas i.e., Las Vegas and Wendys go up and down completely randomly.
Pair Corralation between Las Vegas and Wendys
Considering the 90-day investment horizon Las Vegas Sands is expected to generate 0.94 times more return on investment than Wendys. However, Las Vegas Sands is 1.06 times less risky than Wendys. It trades about 0.12 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.2 per unit of risk. If you would invest 5,117 in Las Vegas Sands on September 3, 2024 and sell it today you would earn a total of 189.00 from holding Las Vegas Sands or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Las Vegas Sands vs. The Wendys Co
Performance |
| Timeline |
| Las Vegas Sands |
| The Wendys |
Las Vegas and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Las Vegas and Wendys
The main advantage of trading using opposite Las Vegas and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas 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.| Las Vegas vs. MGM Resorts International | Las Vegas vs. Caesars Entertainment | Las Vegas vs. Penn National Gaming | Las Vegas vs. Melco Resorts Entertainment |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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