Correlation Between Wingstop and Cracker Barrel
Can any of the company-specific risk be diversified away by investing in both Wingstop and Cracker Barrel 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 Cracker Barrel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Cracker Barrel Old, you can compare the effects of market volatilities on Wingstop and Cracker Barrel 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 Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Cracker Barrel.
Diversification Opportunities for Wingstop and Cracker Barrel
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wingstop and Cracker is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Cracker Barrel Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cracker Barrel Old 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 Cracker Barrel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cracker Barrel Old has no effect on the direction of Wingstop i.e., Wingstop and Cracker Barrel go up and down completely randomly.
Pair Corralation between Wingstop and Cracker Barrel
Given the investment horizon of 90 days Wingstop is expected to generate 0.87 times more return on investment than Cracker Barrel. However, Wingstop is 1.15 times less risky than Cracker Barrel. It trades about 0.07 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about -0.03 per unit of risk. If you would invest 24,204 in Wingstop on August 27, 2024 and sell it today you would earn a total of 9,556 from holding Wingstop or generate 39.48% 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. Cracker Barrel Old
Performance |
| Timeline |
| Wingstop |
| Cracker Barrel Old |
Wingstop and Cracker Barrel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Cracker Barrel
The main advantage of trading using opposite Wingstop and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Cracker Barrel 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 Cracker Barrel will offset losses from the drop in Cracker Barrel's long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns International |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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