Correlation Between NVIDIA and Wendys
Can any of the company-specific risk be diversified away by investing in both NVIDIA 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 NVIDIA and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and The Wendys Co, you can compare the effects of market volatilities on NVIDIA 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 NVIDIA with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Wendys.
Diversification Opportunities for NVIDIA and Wendys
Poor diversification
The 3 months correlation between NVIDIA and Wendys is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and NVIDIA 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 NVIDIA 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 NVIDIA i.e., NVIDIA and Wendys go up and down completely randomly.
Pair Corralation between NVIDIA and Wendys
Given the investment horizon of 90 days NVIDIA is expected to generate 2.2 times more return on investment than Wendys. However, NVIDIA is 2.2 times more volatile than The Wendys Co. It trades about 0.15 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.01 per unit of risk. If you would invest 2,108 in NVIDIA on August 27, 2024 and sell it today you would earn a total of 12,087 from holding NVIDIA or generate 573.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. The Wendys Co
Performance |
| Timeline |
| NVIDIA |
| The Wendys |
NVIDIA and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Wendys
The main advantage of trading using opposite NVIDIA and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |