Correlation Between TFI International and Wingstop
Can any of the company-specific risk be diversified away by investing in both TFI International 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 TFI International and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFI International and Wingstop, you can compare the effects of market volatilities on TFI International 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 TFI International with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFI International and Wingstop.
Diversification Opportunities for TFI International and Wingstop
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TFI and Wingstop is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding TFI International and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and TFI International 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 TFI International 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 TFI International i.e., TFI International and Wingstop go up and down completely randomly.
Pair Corralation between TFI International and Wingstop
Given the investment horizon of 90 days TFI International is expected to generate 2.21 times less return on investment than Wingstop. But when comparing it to its historical volatility, TFI International is 1.28 times less risky than Wingstop. It trades about 0.05 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 14,284 in Wingstop on August 31, 2024 and sell it today you would earn a total of 18,593 from holding Wingstop or generate 130.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
TFI International vs. Wingstop
Performance |
| Timeline |
| TFI International |
| Wingstop |
TFI International and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFI International and Wingstop
The main advantage of trading using opposite TFI International and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International 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.| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Marten Transport | TFI International vs. Werner Enterprises |
| Wingstop vs. RLJ Lodging Trust | Wingstop vs. Aquagold International | Wingstop vs. Stepstone Group | Wingstop vs. Morningstar Unconstrained Allocation |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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