Correlation Between Wingstop and Pinstripes Holdings
Can any of the company-specific risk be diversified away by investing in both Wingstop and Pinstripes Holdings 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 Pinstripes Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Pinstripes Holdings, you can compare the effects of market volatilities on Wingstop and Pinstripes Holdings 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 Pinstripes Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Pinstripes Holdings.
Diversification Opportunities for Wingstop and Pinstripes Holdings
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wingstop and Pinstripes is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Pinstripes Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinstripes Holdings 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 Pinstripes Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinstripes Holdings has no effect on the direction of Wingstop i.e., Wingstop and Pinstripes Holdings go up and down completely randomly.
Pair Corralation between Wingstop and Pinstripes Holdings
Given the investment horizon of 90 days Wingstop is expected to generate 0.37 times more return on investment than Pinstripes Holdings. However, Wingstop is 2.72 times less risky than Pinstripes Holdings. It trades about -0.05 of its potential returns per unit of risk. Pinstripes Holdings is currently generating about -0.14 per unit of risk. If you would invest 36,696 in Wingstop on October 26, 2024 and sell it today you would lose (8,082) from holding Wingstop or give up 22.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Wingstop vs. Pinstripes Holdings
Performance |
| Timeline |
| Wingstop |
| Pinstripes Holdings |
Wingstop and Pinstripes Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Pinstripes Holdings
The main advantage of trading using opposite Wingstop and Pinstripes Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Pinstripes Holdings 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 Pinstripes Holdings will offset losses from the drop in Pinstripes Holdings' long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza Common |
| Pinstripes Holdings vs. Summit Hotel Properties | Pinstripes Holdings vs. Starbucks | Pinstripes Holdings vs. CECO Environmental Corp | Pinstripes Holdings vs. BJs Restaurants |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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