Correlation Between Wendys and Ark Restaurants
Can any of the company-specific risk be diversified away by investing in both Wendys and Ark Restaurants 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 Ark Restaurants 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 Ark Restaurants Corp, you can compare the effects of market volatilities on Wendys and Ark Restaurants 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 Ark Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and Ark Restaurants.
Diversification Opportunities for Wendys and Ark Restaurants
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wendys and Ark is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Ark Restaurants Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ark Restaurants Corp 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 Ark Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ark Restaurants Corp has no effect on the direction of Wendys i.e., Wendys and Ark Restaurants go up and down completely randomly.
Pair Corralation between Wendys and Ark Restaurants
Considering the 90-day investment horizon The Wendys Co is expected to under-perform the Ark Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, The Wendys Co is 4.03 times less risky than Ark Restaurants. The stock trades about -0.29 of its potential returns per unit of risk. The Ark Restaurants Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,276 in Ark Restaurants Corp on November 3, 2024 and sell it today you would earn a total of 55.00 from holding Ark Restaurants Corp or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
The Wendys Co vs. Ark Restaurants Corp
Performance |
| Timeline |
| The Wendys |
| Ark Restaurants Corp |
Wendys and Ark Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wendys and Ark Restaurants
The main advantage of trading using opposite Wendys and Ark Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys position performs unexpectedly, Ark Restaurants 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 Ark Restaurants will offset losses from the drop in Ark Restaurants' long position.| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza Common | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns International |
| Ark Restaurants vs. Nathans Famous | Ark Restaurants vs. Flanigans Enterprises | Ark Restaurants vs. Good Times Restaurants | Ark Restaurants vs. Auburn National Bancorporation |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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