Correlation Between Yum Brands and Wingstop
Can any of the company-specific risk be diversified away by investing in both Yum Brands and Wingstop 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 Yum Brands and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and Wingstop, you can compare the effects of market volatilities on Yum Brands and Wingstop 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 Yum Brands with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Wingstop.
Diversification Opportunities for Yum Brands and Wingstop
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Yum and Wingstop is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Yum Brands 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 Yum Brands are associated (or correlated) with Wingstop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wingstop has no effect on the direction of Yum Brands i.e., Yum Brands and Wingstop go up and down completely randomly.
Pair Corralation between Yum Brands and Wingstop
Considering the 90-day investment horizon Yum Brands is expected to generate 0.21 times more return on investment than Wingstop. However, Yum Brands is 4.78 times less risky than Wingstop. It trades about 0.01 of its potential returns per unit of risk. Wingstop is currently generating about -0.04 per unit of risk. If you would invest 13,402 in Yum Brands on August 24, 2024 and sell it today you would earn a total of 20.00 from holding Yum Brands or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yum Brands vs. Wingstop
Performance |
| Timeline |
| Yum Brands |
| Wingstop |
Yum Brands and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and Wingstop
The main advantage of trading using opposite Yum Brands and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, Wingstop 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 Wingstop will offset losses from the drop in Wingstop's long position.| Yum Brands vs. Shake Shack | Yum Brands vs. Papa Johns International | Yum Brands vs. Dominos Pizza | Yum Brands vs. Jack In The |
| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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