Correlation Between Franklin Street and Wingstop
Can any of the company-specific risk be diversified away by investing in both Franklin Street 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 Franklin Street and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Street Properties and Wingstop, you can compare the effects of market volatilities on Franklin Street 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 Franklin Street with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Street and Wingstop.
Diversification Opportunities for Franklin Street and Wingstop
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and Wingstop is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Street Properties and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Franklin Street 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 Franklin Street Properties 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 Franklin Street i.e., Franklin Street and Wingstop go up and down completely randomly.
Pair Corralation between Franklin Street and Wingstop
Considering the 90-day investment horizon Franklin Street is expected to generate 1.59 times less return on investment than Wingstop. In addition to that, Franklin Street is 1.5 times more volatile than Wingstop. It trades about 0.12 of its total potential returns per unit of risk. Wingstop is currently generating about 0.28 per unit of volatility. If you would invest 28,975 in Wingstop on August 31, 2024 and sell it today you would earn a total of 4,152 from holding Wingstop or generate 14.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Street Properties vs. Wingstop
Performance |
| Timeline |
| Franklin Street Prop |
| Wingstop |
Franklin Street and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Street and Wingstop
The main advantage of trading using opposite Franklin Street and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Street 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.| Franklin Street vs. Equity Commonwealth | Franklin Street vs. Cousins Properties Incorporated | Franklin Street vs. Creative Media Community | Franklin Street vs. Highwoods Properties |
| Wingstop vs. RLJ Lodging Trust | Wingstop vs. Aquagold International | Wingstop vs. Stepstone Group | Wingstop vs. Morningstar Unconstrained Allocation |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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