Correlation Between Wendys and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Wendys and Analog Devices 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 Wendys and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Wendys Co and Analog Devices, you can compare the effects of market volatilities on Wendys and Analog Devices 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 Wendys with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and Analog Devices.
Diversification Opportunities for Wendys and Analog Devices
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wendys and Analog is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Wendys 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 The Wendys Co are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Wendys i.e., Wendys and Analog Devices go up and down completely randomly.
Pair Corralation between Wendys and Analog Devices
Considering the 90-day investment horizon Wendys is expected to generate 8.98 times less return on investment than Analog Devices. But when comparing it to its historical volatility, The Wendys Co is 1.2 times less risky than Analog Devices. It trades about 0.0 of its potential returns per unit of risk. Analog Devices is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 22,329 in Analog Devices on November 28, 2024 and sell it today you would earn a total of 1,279 from holding Analog Devices or generate 5.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Wendys Co vs. Analog Devices
Performance |
| Timeline |
| The Wendys |
| Analog Devices |
Wendys and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wendys and Analog Devices
The main advantage of trading using opposite Wendys and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza Common | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns International |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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