Correlation Between Cheesecake Factory and Wingstop
Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory 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 Cheesecake Factory and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Cheesecake Factory and Wingstop, you can compare the effects of market volatilities on Cheesecake Factory 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 Cheesecake Factory with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and Wingstop.
Diversification Opportunities for Cheesecake Factory and Wingstop
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cheesecake and Wingstop is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Cheesecake Factory 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 Cheesecake Factory 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 Cheesecake Factory i.e., Cheesecake Factory and Wingstop go up and down completely randomly.
Pair Corralation between Cheesecake Factory and Wingstop
Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 0.66 times more return on investment than Wingstop. However, The Cheesecake Factory is 1.51 times less risky than Wingstop. It trades about 0.11 of its potential returns per unit of risk. Wingstop is currently generating about -0.06 per unit of risk. If you would invest 4,034 in The Cheesecake Factory on August 24, 2024 and sell it today you would earn a total of 600.00 from holding The Cheesecake Factory or generate 14.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Cheesecake Factory vs. Wingstop
Performance |
| Timeline |
| The Cheesecake Factory |
| Wingstop |
Cheesecake Factory and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheesecake Factory and Wingstop
The main advantage of trading using opposite Cheesecake Factory and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory 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.| Cheesecake Factory vs. Dine Brands Global | Cheesecake Factory vs. Bloomin Brands | Cheesecake Factory vs. BJs Restaurants | Cheesecake Factory 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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