Correlation Between Wendys and Barnes Noble
Can any of the company-specific risk be diversified away by investing in both Wendys and Barnes Noble 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 Barnes Noble 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 Barnes Noble Education, you can compare the effects of market volatilities on Wendys and Barnes Noble 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 Barnes Noble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and Barnes Noble.
Diversification Opportunities for Wendys and Barnes Noble
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wendys and Barnes is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Barnes Noble Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Noble Education 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 Barnes Noble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Noble Education has no effect on the direction of Wendys i.e., Wendys and Barnes Noble go up and down completely randomly.
Pair Corralation between Wendys and Barnes Noble
Considering the 90-day investment horizon The Wendys Co is expected to under-perform the Barnes Noble. But the stock apears to be less risky and, when comparing its historical volatility, The Wendys Co is 3.53 times less risky than Barnes Noble. The stock trades about -0.18 of its potential returns per unit of risk. The Barnes Noble Education is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 969.00 in Barnes Noble Education on August 31, 2024 and sell it today you would earn a total of 131.00 from holding Barnes Noble Education or generate 13.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Wendys Co vs. Barnes Noble Education
Performance |
| Timeline |
| The Wendys |
| Barnes Noble Education |
Wendys and Barnes Noble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wendys and Barnes Noble
The main advantage of trading using opposite Wendys and Barnes Noble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys position performs unexpectedly, Barnes Noble 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 Barnes Noble will offset losses from the drop in Barnes Noble's long position.| Wendys vs. Wingstop | Wendys vs. RLJ Lodging Trust | Wendys vs. Aquagold International | Wendys vs. Stepstone Group |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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