Correlation Between Wendys and Dixie Lee
Can any of the company-specific risk be diversified away by investing in both Wendys and Dixie Lee 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 Dixie Lee 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 Dixie Lee International, you can compare the effects of market volatilities on Wendys and Dixie Lee 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 Dixie Lee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and Dixie Lee.
Diversification Opportunities for Wendys and Dixie Lee
Very good diversification
The 3 months correlation between Wendys and Dixie is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Dixie Lee International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixie Lee International 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 Dixie Lee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixie Lee International has no effect on the direction of Wendys i.e., Wendys and Dixie Lee go up and down completely randomly.
Pair Corralation between Wendys and Dixie Lee
If you would invest 0.01 in Dixie Lee International on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Dixie Lee International or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
The Wendys Co vs. Dixie Lee International
Performance |
| Timeline |
| The Wendys |
| Dixie Lee International |
Wendys and Dixie Lee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wendys and Dixie Lee
The main advantage of trading using opposite Wendys and Dixie Lee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys position performs unexpectedly, Dixie Lee 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 Dixie Lee will offset losses from the drop in Dixie Lee's long position.| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza Common | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns International |
| Dixie Lee vs. The Wendys Co | Dixie Lee vs. Yum Brands | Dixie Lee vs. Dominos Pizza Common | Dixie Lee vs. Darden Restaurants |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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