Correlation Between Wingstop and Noble Romans
Can any of the company-specific risk be diversified away by investing in both Wingstop and Noble Romans 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 Noble Romans into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Noble Romans, you can compare the effects of market volatilities on Wingstop and Noble Romans 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 Noble Romans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Noble Romans.
Diversification Opportunities for Wingstop and Noble Romans
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wingstop and Noble is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Noble Romans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble Romans 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 Noble Romans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble Romans has no effect on the direction of Wingstop i.e., Wingstop and Noble Romans go up and down completely randomly.
Pair Corralation between Wingstop and Noble Romans
Given the investment horizon of 90 days Wingstop is expected to under-perform the Noble Romans. But the stock apears to be less risky and, when comparing its historical volatility, Wingstop is 3.67 times less risky than Noble Romans. The stock trades about -0.05 of its potential returns per unit of risk. The Noble Romans is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Noble Romans on September 13, 2024 and sell it today you would earn a total of 4.00 from holding Noble Romans or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Wingstop vs. Noble Romans
Performance |
| Timeline |
| Wingstop |
| Noble Romans |
Wingstop and Noble Romans Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Noble Romans
The main advantage of trading using opposite Wingstop and Noble Romans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Noble Romans 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 Noble Romans will offset losses from the drop in Noble Romans' long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
| Noble Romans vs. Arhaus Inc | Noble Romans vs. Floor Decor Holdings | Noble Romans vs. Live Ventures | Noble Romans vs. ATT Inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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