Correlation Between Wingstop and Royal Caribbean
Can any of the company-specific risk be diversified away by investing in both Wingstop and Royal Caribbean 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 Royal Caribbean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Royal Caribbean Cruises, you can compare the effects of market volatilities on Wingstop and Royal Caribbean 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 Royal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Royal Caribbean.
Diversification Opportunities for Wingstop and Royal Caribbean
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wingstop and Royal is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Royal Caribbean Cruises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean Cruises 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 Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Cruises has no effect on the direction of Wingstop i.e., Wingstop and Royal Caribbean go up and down completely randomly.
Pair Corralation between Wingstop and Royal Caribbean
Given the investment horizon of 90 days Wingstop is expected to generate 0.64 times more return on investment than Royal Caribbean. However, Wingstop is 1.56 times less risky than Royal Caribbean. It trades about 0.27 of its potential returns per unit of risk. Royal Caribbean Cruises is currently generating about 0.14 per unit of risk. If you would invest 27,292 in Wingstop on November 18, 2024 and sell it today you would earn a total of 3,177 from holding Wingstop or generate 11.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wingstop vs. Royal Caribbean Cruises
Performance |
| Timeline |
| Wingstop |
| Royal Caribbean Cruises |
Wingstop and Royal Caribbean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Royal Caribbean
The main advantage of trading using opposite Wingstop and Royal Caribbean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Royal Caribbean 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 Royal Caribbean will offset losses from the drop in Royal Caribbean's long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza Common |
| Royal Caribbean vs. Carnival | Royal Caribbean vs. Airbnb Inc | Royal Caribbean vs. Expedia Group | Royal Caribbean 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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