Correlation Between RCI Hospitality and Wingstop
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality 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 RCI Hospitality and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCI Hospitality Holdings and Wingstop, you can compare the effects of market volatilities on RCI Hospitality 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 RCI Hospitality with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Wingstop.
Diversification Opportunities for RCI Hospitality and Wingstop
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RCI and Wingstop is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and RCI Hospitality 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 RCI Hospitality Holdings 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 RCI Hospitality i.e., RCI Hospitality and Wingstop go up and down completely randomly.
Pair Corralation between RCI Hospitality and Wingstop
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the Wingstop. But the stock apears to be less risky and, when comparing its historical volatility, RCI Hospitality Holdings is 1.09 times less risky than Wingstop. The stock trades about -0.05 of its potential returns per unit of risk. The Wingstop is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 16,291 in Wingstop on August 27, 2024 and sell it today you would earn a total of 17,469 from holding Wingstop or generate 107.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Wingstop
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Wingstop |
RCI Hospitality and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Wingstop
The main advantage of trading using opposite RCI Hospitality and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality 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.| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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