Correlation Between Wingstop and Amazon
Can any of the company-specific risk be diversified away by investing in both Wingstop and Amazon 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 Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Amazon Inc, you can compare the effects of market volatilities on Wingstop and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Amazon.
Diversification Opportunities for Wingstop and Amazon
Excellent diversification
The 3 months correlation between Wingstop and Amazon is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Wingstop i.e., Wingstop and Amazon go up and down completely randomly.
Pair Corralation between Wingstop and Amazon
Given the investment horizon of 90 days Wingstop is expected to generate 1.1 times less return on investment than Amazon. In addition to that, Wingstop is 1.49 times more volatile than Amazon Inc. It trades about 0.06 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.09 per unit of volatility. If you would invest 14,589 in Amazon Inc on September 4, 2024 and sell it today you would earn a total of 6,482 from holding Amazon Inc or generate 44.43% 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. Amazon Inc
Performance |
| Timeline |
| Wingstop |
| Amazon Inc |
Wingstop and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Amazon
The main advantage of trading using opposite Wingstop and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| Wingstop vs. Hyatt Hotels | Wingstop vs. Smart Share Global | Wingstop vs. Sweetgreen | Wingstop vs. Wyndham Hotels Resorts |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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