Correlation Between Bloomin Brands and Wendys
Can any of the company-specific risk be diversified away by investing in both Bloomin Brands and Wendys 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 Bloomin Brands and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloomin Brands and The Wendys Co, you can compare the effects of market volatilities on Bloomin Brands and Wendys 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 Bloomin Brands with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomin Brands and Wendys.
Diversification Opportunities for Bloomin Brands and Wendys
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bloomin and Wendys is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bloomin Brands and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Bloomin Brands 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 Bloomin Brands are associated (or correlated) with Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of Bloomin Brands i.e., Bloomin Brands and Wendys go up and down completely randomly.
Pair Corralation between Bloomin Brands and Wendys
Given the investment horizon of 90 days Bloomin Brands is expected to generate 1.46 times more return on investment than Wendys. However, Bloomin Brands is 1.46 times more volatile than The Wendys Co. It trades about 0.03 of its potential returns per unit of risk. The Wendys Co is currently generating about 0.03 per unit of risk. If you would invest 2,064 in Bloomin Brands on January 26, 2024 and sell it today you would earn a total of 639.00 from holding Bloomin Brands or generate 30.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bloomin Brands vs. The Wendys Co
Performance |
| Timeline |
| Bloomin Brands |
| The Wendys |
Bloomin Brands and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bloomin Brands and Wendys
The main advantage of trading using opposite Bloomin Brands and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomin Brands position performs unexpectedly, Wendys 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 Wendys will offset losses from the drop in Wendys' long position.| Bloomin Brands vs. Dine Brands Global | Bloomin Brands vs. BJs Restaurants | Bloomin Brands vs. The Cheesecake Factory | Bloomin Brands vs. Brinker International |
| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns International |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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