Correlation Between Wingstop and Las Vegas
Can any of the company-specific risk be diversified away by investing in both Wingstop and Las Vegas 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 Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Las Vegas Sands, you can compare the effects of market volatilities on Wingstop and Las Vegas 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 Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Las Vegas.
Diversification Opportunities for Wingstop and Las Vegas
Very good diversification
The 3 months correlation between Wingstop and Las is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Wingstop i.e., Wingstop and Las Vegas go up and down completely randomly.
Pair Corralation between Wingstop and Las Vegas
Given the investment horizon of 90 days Wingstop is expected to generate 1.41 times more return on investment than Las Vegas. However, Wingstop is 1.41 times more volatile than Las Vegas Sands. It trades about 0.07 of its potential returns per unit of risk. Las Vegas Sands 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wingstop vs. Las Vegas Sands
Performance |
| Timeline |
| Wingstop |
| Las Vegas Sands |
Wingstop and Las Vegas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Las Vegas
The main advantage of trading using opposite Wingstop and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
| Las Vegas vs. MGM Resorts International | Las Vegas vs. Caesars Entertainment | Las Vegas vs. Penn National Gaming | Las Vegas vs. Melco Resorts Entertainment |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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