Correlation Between Wingstop and Evgo
Can any of the company-specific risk be diversified away by investing in both Wingstop and Evgo 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 Evgo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Evgo Inc, you can compare the effects of market volatilities on Wingstop and Evgo 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 Evgo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Evgo.
Diversification Opportunities for Wingstop and Evgo
Very good diversification
The 3 months correlation between Wingstop and Evgo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Evgo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evgo 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 Evgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evgo Inc has no effect on the direction of Wingstop i.e., Wingstop and Evgo go up and down completely randomly.
Pair Corralation between Wingstop and Evgo
Given the investment horizon of 90 days Wingstop is expected to under-perform the Evgo. But the stock apears to be less risky and, when comparing its historical volatility, Wingstop is 2.49 times less risky than Evgo. The stock trades about -0.02 of its potential returns per unit of risk. The Evgo Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 195.00 in Evgo Inc on August 31, 2024 and sell it today you would earn a total of 456.00 from holding Evgo Inc or generate 233.85% 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. Evgo Inc
Performance |
| Timeline |
| Wingstop |
| Evgo Inc |
Wingstop and Evgo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Evgo
The main advantage of trading using opposite Wingstop and Evgo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Evgo 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 Evgo will offset losses from the drop in Evgo's long position.| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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