Correlation Between Wendys and Weyco
Can any of the company-specific risk be diversified away by investing in both Wendys and Weyco 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 Weyco 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 Weyco Group, you can compare the effects of market volatilities on Wendys and Weyco 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 Weyco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and Weyco.
Diversification Opportunities for Wendys and Weyco
Very weak diversification
The 3 months correlation between Wendys and Weyco is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco 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 Weyco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyco Group has no effect on the direction of Wendys i.e., Wendys and Weyco go up and down completely randomly.
Pair Corralation between Wendys and Weyco
Considering the 90-day investment horizon Wendys is expected to generate 146.38 times less return on investment than Weyco. But when comparing it to its historical volatility, The Wendys Co is 1.46 times less risky than Weyco. It trades about 0.0 of its potential returns per unit of risk. Weyco Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,852 in Weyco Group on September 4, 2024 and sell it today you would earn a total of 713.00 from holding Weyco Group or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Wendys Co vs. Weyco Group
Performance |
| Timeline |
| The Wendys |
| Weyco Group |
Wendys and Weyco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wendys and Weyco
The main advantage of trading using opposite Wendys and Weyco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys position performs unexpectedly, Weyco 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 Weyco will offset losses from the drop in Weyco's long position.| Wendys vs. Hyatt Hotels | Wendys vs. Smart Share Global | Wendys vs. Sweetgreen | Wendys vs. Wyndham Hotels Resorts |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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