Correlation Between Wingstop and Lottery, Common
Can any of the company-specific risk be diversified away by investing in both Wingstop and Lottery, Common 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 Lottery, Common into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Lottery, Common Stock, you can compare the effects of market volatilities on Wingstop and Lottery, Common 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 Lottery, Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Lottery, Common.
Diversification Opportunities for Wingstop and Lottery, Common
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wingstop and Lottery, is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Lottery, Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lottery, Common Stock 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 Lottery, Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lottery, Common Stock has no effect on the direction of Wingstop i.e., Wingstop and Lottery, Common go up and down completely randomly.
Pair Corralation between Wingstop and Lottery, Common
Given the investment horizon of 90 days Wingstop is expected to generate 0.67 times more return on investment than Lottery, Common. However, Wingstop is 1.49 times less risky than Lottery, Common. It trades about -0.04 of its potential returns per unit of risk. Lottery, Common Stock is currently generating about -0.15 per unit of risk. If you would invest 36,826 in Wingstop on August 29, 2024 and sell it today you would lose (2,947) from holding Wingstop or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wingstop vs. Lottery, Common Stock
Performance |
| Timeline |
| Wingstop |
| Lottery, Common Stock |
Wingstop and Lottery, Common Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Lottery, Common
The main advantage of trading using opposite Wingstop and Lottery, Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Lottery, Common 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 Lottery, Common will offset losses from the drop in Lottery, Common's long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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