Correlation Between Jollibee Foods and Wingstop
Can any of the company-specific risk be diversified away by investing in both Jollibee Foods 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 Jollibee Foods and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jollibee Foods Corp and Wingstop, you can compare the effects of market volatilities on Jollibee Foods 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 Jollibee Foods with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jollibee Foods and Wingstop.
Diversification Opportunities for Jollibee Foods and Wingstop
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jollibee and Wingstop is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Jollibee Foods Corp and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Jollibee Foods 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 Jollibee Foods Corp 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 Jollibee Foods i.e., Jollibee Foods and Wingstop go up and down completely randomly.
Pair Corralation between Jollibee Foods and Wingstop
Assuming the 90 days horizon Jollibee Foods is expected to generate 1.4 times less return on investment than Wingstop. But when comparing it to its historical volatility, Jollibee Foods Corp is 1.03 times less risky than Wingstop. It trades about 0.03 of its potential returns per unit of risk. Wingstop is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 25,381 in Wingstop on September 14, 2024 and sell it today you would earn a total of 5,630 from holding Wingstop or generate 22.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.16% |
| Values | Daily Returns |
Jollibee Foods Corp vs. Wingstop
Performance |
| Timeline |
| Jollibee Foods Corp |
| Wingstop |
Jollibee Foods and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jollibee Foods and Wingstop
The main advantage of trading using opposite Jollibee Foods and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jollibee Foods 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.| Jollibee Foods vs. Nathans Famous | Jollibee Foods vs. Good Times Restaurants | Jollibee Foods vs. McDonalds Holdings | Jollibee Foods vs. Compass Group PLC |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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