Correlation Between Wendys and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both Wendys and Minerals Technologies 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 Minerals Technologies 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 Minerals Technologies, you can compare the effects of market volatilities on Wendys and Minerals Technologies 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 Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and Minerals Technologies.
Diversification Opportunities for Wendys and Minerals Technologies
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wendys and Minerals is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Wendys i.e., Wendys and Minerals Technologies go up and down completely randomly.
Pair Corralation between Wendys and Minerals Technologies
Considering the 90-day investment horizon The Wendys Co is expected to under-perform the Minerals Technologies. But the stock apears to be less risky and, when comparing its historical volatility, The Wendys Co is 1.23 times less risky than Minerals Technologies. The stock trades about -0.15 of its potential returns per unit of risk. The Minerals Technologies is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 8,083 in Minerals Technologies on September 13, 2024 and sell it today you would lose (145.00) from holding Minerals Technologies or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Wendys Co vs. Minerals Technologies
Performance |
| Timeline |
| The Wendys |
| Minerals Technologies |
Wendys and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wendys and Minerals Technologies
The main advantage of trading using opposite Wendys and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns International |
| Minerals Technologies vs. LyondellBasell Industries NV | Minerals Technologies vs. International Flavors Fragrances | Minerals Technologies vs. Cabot | Minerals Technologies vs. Westlake Chemical |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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