Correlation Between Stepstone and Wingstop
Can any of the company-specific risk be diversified away by investing in both Stepstone 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 Stepstone and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Wingstop, you can compare the effects of market volatilities on Stepstone 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 Stepstone with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Wingstop.
Diversification Opportunities for Stepstone and Wingstop
Excellent diversification
The 3 months correlation between Stepstone and Wingstop is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Stepstone 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 Stepstone 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 Stepstone i.e., Stepstone and Wingstop go up and down completely randomly.
Pair Corralation between Stepstone and Wingstop
Given the investment horizon of 90 days Stepstone Group is expected to generate 0.88 times more return on investment than Wingstop. However, Stepstone Group is 1.13 times less risky than Wingstop. It trades about 0.09 of its potential returns per unit of risk. Wingstop is currently generating about 0.07 per unit of risk. If you would invest 2,702 in Stepstone Group on September 2, 2024 and sell it today you would earn a total of 3,887 from holding Stepstone Group or generate 143.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Wingstop
Performance |
| Timeline |
| Stepstone Group |
| Wingstop |
Stepstone and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Wingstop
The main advantage of trading using opposite Stepstone and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone 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.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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