Correlation Between Wendys and GEN Restaurant
Can any of the company-specific risk be diversified away by investing in both Wendys and GEN Restaurant 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 GEN Restaurant 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 GEN Restaurant Group,, you can compare the effects of market volatilities on Wendys and GEN Restaurant 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 GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and GEN Restaurant.
Diversification Opportunities for Wendys and GEN Restaurant
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wendys and GEN is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Wendys i.e., Wendys and GEN Restaurant go up and down completely randomly.
Pair Corralation between Wendys and GEN Restaurant
Considering the 90-day investment horizon The Wendys Co is expected to under-perform the GEN Restaurant. But the stock apears to be less risky and, when comparing its historical volatility, The Wendys Co is 35.96 times less risky than GEN Restaurant. The stock trades about -0.01 of its potential returns per unit of risk. The GEN Restaurant Group, is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.00 in GEN Restaurant Group, on August 30, 2024 and sell it today you would earn a total of 822.00 from holding GEN Restaurant Group, or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 72.73% |
| Values | Daily Returns |
The Wendys Co vs. GEN Restaurant Group,
Performance |
| Timeline |
| The Wendys |
| GEN Restaurant Group, |
Wendys and GEN Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wendys and GEN Restaurant
The main advantage of trading using opposite Wendys and GEN Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys position performs unexpectedly, GEN Restaurant 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 GEN Restaurant will offset losses from the drop in GEN Restaurant's long position.The idea behind The Wendys Co and GEN Restaurant Group, pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| GEN Restaurant vs. Jack In The | GEN Restaurant vs. Potbelly Co | GEN Restaurant vs. Rave Restaurant Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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