Correlation Between Wendys and Atour Lifestyle
Can any of the company-specific risk be diversified away by investing in both Wendys and Atour Lifestyle 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 Atour Lifestyle 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 Atour Lifestyle Holdings, you can compare the effects of market volatilities on Wendys and Atour Lifestyle 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 Atour Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and Atour Lifestyle.
Diversification Opportunities for Wendys and Atour Lifestyle
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wendys and Atour is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Atour Lifestyle Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atour Lifestyle Holdings 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 Atour Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atour Lifestyle Holdings has no effect on the direction of Wendys i.e., Wendys and Atour Lifestyle go up and down completely randomly.
Pair Corralation between Wendys and Atour Lifestyle
Considering the 90-day investment horizon The Wendys Co is expected to under-perform the Atour Lifestyle. In addition to that, Wendys is 1.12 times more volatile than Atour Lifestyle Holdings. It trades about -0.33 of its total potential returns per unit of risk. Atour Lifestyle Holdings is currently generating about -0.06 per unit of volatility. If you would invest 1,819 in Atour Lifestyle Holdings on March 12, 2024 and sell it today you would lose (29.00) from holding Atour Lifestyle Holdings or give up 1.59% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Wendys Co vs. Atour Lifestyle Holdings
Performance |
Timeline |
The Wendys |
Atour Lifestyle Holdings |
Wendys and Atour Lifestyle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wendys and Atour Lifestyle
The main advantage of trading using opposite Wendys and Atour Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys position performs unexpectedly, Atour Lifestyle 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 Atour Lifestyle will offset losses from the drop in Atour Lifestyle's long position.Wendys vs. OReilly Automotive | Wendys vs. Kosmos Energy | Wendys vs. Knight Transportation | Wendys vs. Glacier Bancorp |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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