Correlation Between Volcon and Wendys
Can any of the company-specific risk be diversified away by investing in both Volcon 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 Volcon and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volcon Inc and The Wendys Co, you can compare the effects of market volatilities on Volcon 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 Volcon with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volcon and Wendys.
Diversification Opportunities for Volcon and Wendys
Very poor diversification
The 3 months correlation between Volcon and Wendys is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Volcon 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 Volcon 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 Volcon 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 Volcon i.e., Volcon and Wendys go up and down completely randomly.
Pair Corralation between Volcon and Wendys
Given the investment horizon of 90 days Volcon Inc is expected to under-perform the Wendys. In addition to that, Volcon is 2.04 times more volatile than The Wendys Co. It trades about -0.02 of its total potential returns per unit of risk. The Wendys Co is currently generating about -0.04 per unit of volatility. If you would invest 1,227 in The Wendys Co on March 9, 2025 and sell it today you would lose (59.00) from holding The Wendys Co or give up 4.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volcon Inc vs. The Wendys Co
Performance |
| Timeline |
| Volcon Inc |
| The Wendys |
Volcon and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volcon and Wendys
The main advantage of trading using opposite Volcon and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volcon 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.| Volcon vs. AYRO Inc | Volcon vs. Workhorse Group | Volcon vs. GreenPower Motor | Volcon vs. Cenntro Electric Group |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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