Correlation Between Wendys and One Group

Can any of the company-specific risk be diversified away by investing in both Wendys and One Group 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 One Group 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 One Group Hospitality, you can compare the effects of market volatilities on Wendys and One Group 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 One Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and One Group.

Diversification Opportunities for Wendys and One Group

0.39

Correlation Coefficient

Wendys  One Group

Weak diversification

The 3 months correlation between Wendys and One is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and One Group Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Group Hospitality 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 One Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Group Hospitality has no effect on the direction of Wendys i.e., Wendys and One Group go up and down completely randomly.

Pair Corralation between Wendys and One Group

Considering the 90-day investment horizon Wendys is expected to generate 3.71 times less return on investment than One Group. But when comparing it to its historical volatility, The Wendys Co is 5.07 times less risky than One Group. It trades about 0.33 of its potential returns per unit of risk. One Group Hospitality is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  401.00  in One Group Hospitality on January 26, 2024 and sell it today you would earn a total of  132.00  from holding One Group Hospitality or generate 32.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

The Wendys Co  vs.  One Group Hospitality

The Wendys

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Wendys Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Wendys is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

One Group Hospitality

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in One Group Hospitality are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, One Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wendys and One Group

The main advantage of trading using opposite Wendys and One Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys position performs unexpectedly, One Group 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 One Group will offset losses from the drop in One Group's long position.

The idea behind The Wendys Co and One Group Hospitality 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.