Correlation Between GEN Restaurant and Wingstop
Can any of the company-specific risk be diversified away by investing in both GEN Restaurant 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 GEN Restaurant and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEN Restaurant Group, and Wingstop, you can compare the effects of market volatilities on GEN Restaurant 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 GEN Restaurant with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEN Restaurant and Wingstop.
Diversification Opportunities for GEN Restaurant and Wingstop
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GEN and Wingstop is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and GEN Restaurant 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 GEN Restaurant Group, 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 GEN Restaurant i.e., GEN Restaurant and Wingstop go up and down completely randomly.
Pair Corralation between GEN Restaurant and Wingstop
Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the Wingstop. But the stock apears to be less risky and, when comparing its historical volatility, GEN Restaurant Group, is 1.01 times less risky than Wingstop. The stock trades about -0.06 of its potential returns per unit of risk. The Wingstop is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 36,631 in Wingstop on August 24, 2024 and sell it today you would lose (2,790) from holding Wingstop or give up 7.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEN Restaurant Group, vs. Wingstop
Performance |
| Timeline |
| GEN Restaurant Group, |
| Wingstop |
GEN Restaurant and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEN Restaurant and Wingstop
The main advantage of trading using opposite GEN Restaurant and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEN Restaurant 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.| GEN Restaurant vs. Bloomin Brands | GEN Restaurant vs. BJs Restaurants | GEN Restaurant vs. Darden Restaurants | GEN Restaurant vs. Wingstop |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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