Correlation Between National CineMedia and Wendys
Can any of the company-specific risk be diversified away by investing in both National CineMedia 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 National CineMedia and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and The Wendys Co, you can compare the effects of market volatilities on National CineMedia 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 National CineMedia with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Wendys.
Diversification Opportunities for National CineMedia and Wendys
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and Wendys is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and National CineMedia 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 National CineMedia 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 National CineMedia i.e., National CineMedia and Wendys go up and down completely randomly.
Pair Corralation between National CineMedia and Wendys
Given the investment horizon of 90 days National CineMedia is expected to generate 1.69 times more return on investment than Wendys. However, National CineMedia is 1.69 times more volatile than The Wendys Co. It trades about -0.04 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.1 per unit of risk. If you would invest 719.00 in National CineMedia on September 1, 2024 and sell it today you would lose (24.00) from holding National CineMedia or give up 3.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National CineMedia vs. The Wendys Co
Performance |
| Timeline |
| National CineMedia |
| The Wendys |
National CineMedia and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Wendys
The main advantage of trading using opposite National CineMedia and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia 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.| National CineMedia vs. Mirriad Advertising plc | National CineMedia vs. INEO Tech Corp | National CineMedia vs. Kidoz Inc | National CineMedia vs. Marchex |
| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns International |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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