Correlation Between Wingstop and Norwegian Cruise
Can any of the company-specific risk be diversified away by investing in both Wingstop and Norwegian Cruise 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 Norwegian Cruise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Norwegian Cruise Line, you can compare the effects of market volatilities on Wingstop and Norwegian Cruise 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 Norwegian Cruise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Norwegian Cruise.
Diversification Opportunities for Wingstop and Norwegian Cruise
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wingstop and Norwegian is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Norwegian Cruise Line in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Cruise Line 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 Norwegian Cruise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Cruise Line has no effect on the direction of Wingstop i.e., Wingstop and Norwegian Cruise go up and down completely randomly.
Pair Corralation between Wingstop and Norwegian Cruise
Given the investment horizon of 90 days Wingstop is expected to under-perform the Norwegian Cruise. In addition to that, Wingstop is 2.08 times more volatile than Norwegian Cruise Line. It trades about -0.06 of its total potential returns per unit of risk. Norwegian Cruise Line is currently generating about 0.21 per unit of volatility. If you would invest 2,411 in Norwegian Cruise Line on August 30, 2024 and sell it today you would earn a total of 281.00 from holding Norwegian Cruise Line or generate 11.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wingstop vs. Norwegian Cruise Line
Performance |
| Timeline |
| Wingstop |
| Norwegian Cruise Line |
Wingstop and Norwegian Cruise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Norwegian Cruise
The main advantage of trading using opposite Wingstop and Norwegian Cruise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Norwegian Cruise 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 Norwegian Cruise will offset losses from the drop in Norwegian Cruise's long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
| Norwegian Cruise vs. Carnival | Norwegian Cruise vs. Airbnb Inc | Norwegian Cruise vs. Expedia Group | Norwegian Cruise vs. Booking Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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