Correlation Between Wendys and Potbelly
Can any of the company-specific risk be diversified away by investing in both Wendys and Potbelly 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 Potbelly 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 Potbelly Co, you can compare the effects of market volatilities on Wendys and Potbelly 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 Potbelly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and Potbelly.
Diversification Opportunities for Wendys and Potbelly
Excellent diversification
The 3 months correlation between Wendys and Potbelly is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Potbelly Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Potbelly 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 Potbelly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Potbelly has no effect on the direction of Wendys i.e., Wendys and Potbelly go up and down completely randomly.
Pair Corralation between Wendys and Potbelly
Considering the 90-day investment horizon The Wendys Co is expected to under-perform the Potbelly. But the stock apears to be less risky and, when comparing its historical volatility, The Wendys Co is 2.03 times less risky than Potbelly. The stock trades about -0.07 of its potential returns per unit of risk. The Potbelly Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 717.00 in Potbelly Co on October 26, 2024 and sell it today you would earn a total of 476.00 from holding Potbelly Co or generate 66.39% 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. Potbelly Co
Performance |
| Timeline |
| The Wendys |
| Potbelly |
Wendys and Potbelly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wendys and Potbelly
The main advantage of trading using opposite Wendys and Potbelly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys position performs unexpectedly, Potbelly 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 Potbelly will offset losses from the drop in Potbelly's long position.| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza Common | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns International |
| Potbelly vs. Chipotle Mexican Grill | Potbelly vs. Dominos Pizza Common | Potbelly vs. Yum Brands | Potbelly vs. The Wendys Co |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |