Correlation Between Sweetgreen and Wendys
Can any of the company-specific risk be diversified away by investing in both Sweetgreen 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 Sweetgreen and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sweetgreen and The Wendys Co, you can compare the effects of market volatilities on Sweetgreen 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 Sweetgreen with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sweetgreen and Wendys.
Diversification Opportunities for Sweetgreen and Wendys
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sweetgreen and Wendys is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Sweetgreen 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 Sweetgreen 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 Sweetgreen i.e., Sweetgreen and Wendys go up and down completely randomly.
Pair Corralation between Sweetgreen and Wendys
Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 3.28 times more return on investment than Wendys. However, Sweetgreen is 3.28 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 -0.02 per unit of risk. If you would invest 1,032 in Sweetgreen on August 27, 2024 and sell it today you would earn a total of 3,308 from holding Sweetgreen or generate 320.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sweetgreen vs. The Wendys Co
Performance |
| Timeline |
| Sweetgreen |
| The Wendys |
Sweetgreen and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sweetgreen and Wendys
The main advantage of trading using opposite Sweetgreen and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen 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.| Sweetgreen vs. Cannae Holdings | Sweetgreen vs. Brinker International | Sweetgreen vs. Jack In The | Sweetgreen vs. Biglari Holdings |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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