Correlation Between Aeye and Wendys
Can any of the company-specific risk be diversified away by investing in both Aeye 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 Aeye and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeye Inc and The Wendys Co, you can compare the effects of market volatilities on Aeye 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 Aeye with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeye and Wendys.
Diversification Opportunities for Aeye and Wendys
Excellent diversification
The 3 months correlation between Aeye and Wendys is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Aeye 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 Aeye Inc 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 Aeye i.e., Aeye and Wendys go up and down completely randomly.
Pair Corralation between Aeye and Wendys
Given the investment horizon of 90 days Aeye Inc is expected to generate 2.21 times more return on investment than Wendys. However, Aeye is 2.21 times more volatile than The Wendys Co. It trades about 0.12 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.19 per unit of risk. If you would invest 56.00 in Aeye Inc on March 9, 2025 and sell it today you would earn a total of 19.00 from holding Aeye Inc or generate 33.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeye Inc vs. The Wendys Co
Performance |
| Timeline |
| Aeye Inc |
| The Wendys |
Aeye and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeye and Wendys
The main advantage of trading using opposite Aeye and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye 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.| Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Hesai Group American | Aeye vs. Mobileye Global Class |
| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza Common | 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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