Correlation Between Wingstop and Trip Group
Can any of the company-specific risk be diversified away by investing in both Wingstop and Trip Group 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 Trip Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Trip Group Ltd, you can compare the effects of market volatilities on Wingstop and Trip Group 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 Trip Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Trip Group.
Diversification Opportunities for Wingstop and Trip Group
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wingstop and Trip is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Trip Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trip Group 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 Trip Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trip Group has no effect on the direction of Wingstop i.e., Wingstop and Trip Group go up and down completely randomly.
Pair Corralation between Wingstop and Trip Group
Given the investment horizon of 90 days Wingstop is expected to generate 10.95 times less return on investment than Trip Group. But when comparing it to its historical volatility, Wingstop is 1.0 times less risky than Trip Group. It trades about 0.01 of its potential returns per unit of risk. Trip Group Ltd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,447 in Trip Group Ltd on August 27, 2024 and sell it today you would earn a total of 1,917 from holding Trip Group Ltd or generate 43.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wingstop vs. Trip Group Ltd
Performance |
| Timeline |
| Wingstop |
| Trip Group |
Wingstop and Trip Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Trip Group
The main advantage of trading using opposite Wingstop and Trip Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Trip Group 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 Trip Group will offset losses from the drop in Trip Group's long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
| Trip Group vs. Expedia Group | Trip Group vs. Booking Holdings | Trip Group vs. Despegar Corp | Trip Group vs. Travel Leisure Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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