Correlation Between Bloomin Brands and Wingstop
Can any of the company-specific risk be diversified away by investing in both Bloomin Brands and Wingstop 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 Bloomin Brands and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloomin Brands and Wingstop, you can compare the effects of market volatilities on Bloomin Brands and Wingstop 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 Bloomin Brands with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomin Brands and Wingstop.
Diversification Opportunities for Bloomin Brands and Wingstop
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bloomin and Wingstop is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bloomin Brands and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Bloomin Brands 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 Bloomin Brands are associated (or correlated) with Wingstop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wingstop has no effect on the direction of Bloomin Brands i.e., Bloomin Brands and Wingstop go up and down completely randomly.
Pair Corralation between Bloomin Brands and Wingstop
Given the investment horizon of 90 days Bloomin Brands is expected to under-perform the Wingstop. But the stock apears to be less risky and, when comparing its historical volatility, Bloomin Brands is 1.01 times less risky than Wingstop. The stock trades about -0.07 of its potential returns per unit of risk. The Wingstop is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 23,972 in Wingstop on August 26, 2024 and sell it today you would earn a total of 9,788 from holding Wingstop or generate 40.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bloomin Brands vs. Wingstop
Performance |
| Timeline |
| Bloomin Brands |
| Wingstop |
Bloomin Brands and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bloomin Brands and Wingstop
The main advantage of trading using opposite Bloomin Brands and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomin Brands position performs unexpectedly, Wingstop 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 Wingstop will offset losses from the drop in Wingstop's long position.| Bloomin Brands vs. Dine Brands Global | Bloomin Brands vs. BJs Restaurants | Bloomin Brands vs. The Cheesecake Factory | Bloomin Brands vs. Brinker International |
| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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