Correlation Between Cracker Barrel and Wingstop
Can any of the company-specific risk be diversified away by investing in both Cracker Barrel 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 Cracker Barrel and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cracker Barrel Old and Wingstop, you can compare the effects of market volatilities on Cracker Barrel 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 Cracker Barrel with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and Wingstop.
Diversification Opportunities for Cracker Barrel and Wingstop
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cracker and Wingstop is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Cracker Barrel 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 Cracker Barrel Old 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 Cracker Barrel i.e., Cracker Barrel and Wingstop go up and down completely randomly.
Pair Corralation between Cracker Barrel and Wingstop
Given the investment horizon of 90 days Cracker Barrel Old is expected to under-perform the Wingstop. In addition to that, Cracker Barrel is 2.08 times more volatile than Wingstop. It trades about -0.15 of its total potential returns per unit of risk. Wingstop is currently generating about 0.27 per unit of volatility. If you would invest 27,292 in Wingstop on November 18, 2024 and sell it today you would earn a total of 3,177 from holding Wingstop or generate 11.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cracker Barrel Old vs. Wingstop
Performance |
| Timeline |
| Cracker Barrel Old |
| Wingstop |
Cracker Barrel and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cracker Barrel and Wingstop
The main advantage of trading using opposite Cracker Barrel and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cracker Barrel 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.| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns International |
| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza Common |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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