Correlation Between Wingstop and Dine Brands
Can any of the company-specific risk be diversified away by investing in both Wingstop and Dine Brands 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 Dine Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Dine Brands Global, you can compare the effects of market volatilities on Wingstop and Dine Brands 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 Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Dine Brands.
Diversification Opportunities for Wingstop and Dine Brands
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wingstop and Dine is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global 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 Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of Wingstop i.e., Wingstop and Dine Brands go up and down completely randomly.
Pair Corralation between Wingstop and Dine Brands
Given the investment horizon of 90 days Wingstop is expected to generate 0.62 times more return on investment than Dine Brands. However, Wingstop is 1.61 times less risky than Dine Brands. It trades about 0.13 of its potential returns per unit of risk. Dine Brands Global is currently generating about 0.06 per unit of risk. If you would invest 29,206 in Wingstop on November 2, 2024 and sell it today you would earn a total of 1,370 from holding Wingstop or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wingstop vs. Dine Brands Global
Performance |
| Timeline |
| Wingstop |
| Dine Brands Global |
Wingstop and Dine Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Dine Brands
The main advantage of trading using opposite Wingstop and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Dine Brands 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 Dine Brands will offset losses from the drop in Dine Brands' long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza Common |
| Dine Brands vs. Bloomin Brands | Dine Brands vs. BJs Restaurants | Dine Brands vs. The Cheesecake Factory | Dine Brands vs. Brinker 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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