Correlation Between RCI Hospitality and Wendys
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality 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 RCI Hospitality and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCI Hospitality Holdings and The Wendys Co, you can compare the effects of market volatilities on RCI Hospitality 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 RCI Hospitality with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Wendys.
Diversification Opportunities for RCI Hospitality and Wendys
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between RCI and Wendys is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and RCI Hospitality 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 RCI Hospitality Holdings 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 RCI Hospitality i.e., RCI Hospitality and Wendys go up and down completely randomly.
Pair Corralation between RCI Hospitality and Wendys
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 1.21 times more return on investment than Wendys. However, RCI Hospitality is 1.21 times more volatile than The Wendys Co. It trades about 0.1 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 4,607 in RCI Hospitality Holdings on August 29, 2024 and sell it today you would earn a total of 662.00 from holding RCI Hospitality Holdings or generate 14.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. The Wendys Co
Performance |
| Timeline |
| RCI Hospitality Holdings |
| The Wendys |
RCI Hospitality and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Wendys
The main advantage of trading using opposite RCI Hospitality and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality 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.| RCI Hospitality vs. Jack In The | RCI Hospitality vs. Potbelly Co | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. One Group Hospitality |
| Wendys vs. Jack In The | Wendys vs. Potbelly Co | Wendys vs. BJs Restaurants | Wendys vs. One Group Hospitality |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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