Correlation Between Hyatt Hotels and Wingstop
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels 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 Hyatt Hotels and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and Wingstop, you can compare the effects of market volatilities on Hyatt Hotels 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 Hyatt Hotels with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Wingstop.
Diversification Opportunities for Hyatt Hotels and Wingstop
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hyatt and Wingstop is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Hyatt Hotels 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 Hyatt Hotels 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 Hyatt Hotels i.e., Hyatt Hotels and Wingstop go up and down completely randomly.
Pair Corralation between Hyatt Hotels and Wingstop
Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 1.46 times less return on investment than Wingstop. But when comparing it to its historical volatility, Hyatt Hotels is 1.33 times less risky than Wingstop. It trades about 0.07 of its potential returns per unit of risk. Wingstop is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14,433 in Wingstop on September 12, 2024 and sell it today you would earn a total of 18,556 from holding Wingstop or generate 128.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. Wingstop
Performance |
| Timeline |
| Hyatt Hotels |
| Wingstop |
Hyatt Hotels and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and Wingstop
The main advantage of trading using opposite Hyatt Hotels and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels 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.| Hyatt Hotels vs. InterContinental Hotels Group | Hyatt Hotels vs. Hilton Worldwide Holdings | Hyatt Hotels vs. Marriott International | Hyatt Hotels vs. Choice Hotels International |
| Wingstop vs. Noble Romans | Wingstop vs. Good Times Restaurants | Wingstop vs. Flanigans Enterprises | Wingstop vs. FAT Brands |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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