Correlation Between Banzai International and Wendys

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

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

Diversification Opportunities for Banzai International and Wendys

0.05

Correlation Coefficient

Banzai International  Wendys

Significant diversification

The 3 months correlation between Banzai and Wendys is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Banzai International and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Banzai 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 Banzai International 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 Banzai International i.e., Banzai International and Wendys go up and down completely randomly.

Pair Corralation between Banzai International and Wendys

Given the investment horizon of 90 days Banzai International is expected to under-perform the Wendys. In addition to that, Banzai International is 7.89 times more volatile than The Wendys Co. It trades about -0.06 of its total potential returns per unit of risk. The Wendys Co is currently generating about -0.03 per unit of volatility. If you would invest  1,728  in The Wendys Co on September 28, 2024 and sell it today you would lose (78.00) from holding The Wendys Co or give up 4.51% of portfolio value over 90 days.

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

Banzai International  vs.  The Wendys Co

Banzai International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banzai International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

The Wendys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Wendys Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Banzai International and Wendys

The main advantage of trading using opposite Banzai International and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banzai International 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.

The idea behind Banzai International and The Wendys Co 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.