Correlation Between Procter Gamble and Wendys
Can any of the company-specific risk be diversified away by investing in both Procter Gamble 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 Procter Gamble and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and The Wendys Co, you can compare the effects of market volatilities on Procter Gamble 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 Procter Gamble with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Wendys.
Diversification Opportunities for Procter Gamble and Wendys
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Wendys is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Procter Gamble 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 Procter Gamble 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 Procter Gamble i.e., Procter Gamble and Wendys go up and down completely randomly.
Pair Corralation between Procter Gamble and Wendys
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.59 times more return on investment than Wendys. However, Procter Gamble is 1.7 times less risky than Wendys. It trades about 0.17 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.29 per unit of risk. If you would invest 16,930 in Procter Gamble on August 27, 2024 and sell it today you would earn a total of 698.00 from holding Procter Gamble or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. The Wendys Co
Performance |
| Timeline |
| Procter Gamble |
| The Wendys |
Procter Gamble and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Wendys
The main advantage of trading using opposite Procter Gamble and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |