Correlation Between Wingstop and Airbnb
Can any of the company-specific risk be diversified away by investing in both Wingstop and Airbnb 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 Wingstop and Airbnb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Airbnb Inc, you can compare the effects of market volatilities on Wingstop and Airbnb 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 Wingstop with a short position of Airbnb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Airbnb.
Diversification Opportunities for Wingstop and Airbnb
Very good diversification
The 3 months correlation between Wingstop and Airbnb is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Airbnb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbnb Inc and Wingstop 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 Wingstop are associated (or correlated) with Airbnb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbnb Inc has no effect on the direction of Wingstop i.e., Wingstop and Airbnb go up and down completely randomly.
Pair Corralation between Wingstop and Airbnb
Given the investment horizon of 90 days Wingstop is expected to generate 1.13 times more return on investment than Airbnb. However, Wingstop is 1.13 times more volatile than Airbnb Inc. It trades about 0.07 of its potential returns per unit of risk. Airbnb Inc is currently generating about 0.03 per unit of risk. If you would invest 20,267 in Wingstop on August 27, 2024 and sell it today you would earn a total of 13,493 from holding Wingstop or generate 66.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wingstop vs. Airbnb Inc
Performance |
| Timeline |
| Wingstop |
| Airbnb Inc |
Wingstop and Airbnb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Airbnb
The main advantage of trading using opposite Wingstop and Airbnb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Airbnb 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 Airbnb will offset losses from the drop in Airbnb's long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
| Airbnb vs. Norwegian Cruise Line | Airbnb vs. Royal Caribbean Cruises | Airbnb vs. Expedia Group | Airbnb vs. Booking Holdings |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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