Correlation Between Wingstop and Texas Roadhouse
Can any of the company-specific risk be diversified away by investing in both Wingstop and Texas Roadhouse 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 Texas Roadhouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Texas Roadhouse, you can compare the effects of market volatilities on Wingstop and Texas Roadhouse 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 Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Texas Roadhouse.
Diversification Opportunities for Wingstop and Texas Roadhouse
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wingstop and Texas is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse 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 Texas Roadhouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Roadhouse has no effect on the direction of Wingstop i.e., Wingstop and Texas Roadhouse go up and down completely randomly.
Pair Corralation between Wingstop and Texas Roadhouse
Given the investment horizon of 90 days Wingstop is expected to under-perform the Texas Roadhouse. In addition to that, Wingstop is 3.04 times more volatile than Texas Roadhouse. It trades about -0.06 of its total potential returns per unit of risk. Texas Roadhouse is currently generating about 0.14 per unit of volatility. If you would invest 19,318 in Texas Roadhouse on August 30, 2024 and sell it today you would earn a total of 1,018 from holding Texas Roadhouse or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wingstop vs. Texas Roadhouse
Performance |
| Timeline |
| Wingstop |
| Texas Roadhouse |
Wingstop and Texas Roadhouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Texas Roadhouse
The main advantage of trading using opposite Wingstop and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Texas Roadhouse 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 Texas Roadhouse will offset losses from the drop in Texas Roadhouse's long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
| Texas Roadhouse vs. Brinker International | Texas Roadhouse vs. BJs Restaurants | Texas Roadhouse vs. Papa Johns International | Texas Roadhouse vs. Bloomin Brands |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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