Correlation Between WW International and Noodles

Can any of the company-specific risk be diversified away by investing in both WW International and Noodles 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 WW International and Noodles into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WW International and Noodles Company, you can compare the effects of market volatilities on WW International and Noodles 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 WW International with a short position of Noodles. Check out your portfolio center. Please also check ongoing floating volatility patterns of WW International and Noodles.

Diversification Opportunities for WW International and Noodles

0.89

Correlation Coefficient

WW International  Noodles

Very poor diversification

The 3 months correlation between WW International and Noodles is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding WW International and Noodles Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noodles Company and WW International 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 WW International are associated (or correlated) with Noodles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noodles Company has no effect on the direction of WW International i.e., WW International and Noodles go up and down completely randomly.

Pair Corralation between WW International and Noodles

Allowing for the 90-day total investment horizon WW International is expected to generate 1.4 times more return on investment than Noodles. However, WW International is 1.4 times more volatile than Noodles Company. It trades about -0.05 of its potential returns per unit of risk. Noodles Company is currently generating about -0.38 per unit of risk. If you would invest  180.00  in WW International on January 24, 2024 and sell it today you would lose (17.00) from holding WW International or give up 9.44% of portfolio value over 90 days.

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

WW International  vs.  Noodles Company

WW International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WW International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Noodles Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noodles Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with WW International and Noodles

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

The idea behind WW International and Noodles Company 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.