Correlation Between TKO Group and Wendys
Can any of the company-specific risk be diversified away by investing in both TKO Group 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 TKO Group and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TKO Group Holdings, and The Wendys Co, you can compare the effects of market volatilities on TKO Group 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 TKO Group with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKO Group and Wendys.
Diversification Opportunities for TKO Group and Wendys
Excellent diversification
The 3 months correlation between TKO and Wendys is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding TKO Group 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 TKO Group 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 TKO Group 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 TKO Group i.e., TKO Group and Wendys go up and down completely randomly.
Pair Corralation between TKO Group and Wendys
Considering the 90-day investment horizon TKO Group is expected to generate 2.09 times less return on investment than Wendys. But when comparing it to its historical volatility, TKO Group Holdings, is 1.05 times less risky than Wendys. It trades about 0.1 of its potential returns per unit of risk. The Wendys Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,453 in The Wendys Co on November 28, 2024 and sell it today you would earn a total of 138.00 from holding The Wendys Co or generate 9.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
TKO Group Holdings, vs. The Wendys Co
Performance |
| Timeline |
| TKO Group Holdings, |
| The Wendys |
TKO Group and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TKO Group and Wendys
The main advantage of trading using opposite TKO Group and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TKO Group 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.| TKO Group vs. Torm PLC Class | TKO Group vs. Freedom Holding Corp | TKO Group vs. Eastman Kodak Co | TKO Group vs. Summit Hotel Properties |
| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza Common | 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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