Correlation Between Flanigans Enterprises and Wingstop

Can any of the company-specific risk be diversified away by investing in both Flanigans Enterprises 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 Flanigans Enterprises and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flanigans Enterprises and Wingstop, you can compare the effects of market volatilities on Flanigans Enterprises 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 Flanigans Enterprises with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flanigans Enterprises and Wingstop.

Diversification Opportunities for Flanigans Enterprises and Wingstop

0.71

Correlation Coefficient

Flanigans Enterprises  Wingstop

Poor diversification

The 3 months correlation between Flanigans and Wingstop is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Flanigans Enterprises and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Flanigans Enterprises 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 Flanigans Enterprises 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 Flanigans Enterprises i.e., Flanigans Enterprises and Wingstop go up and down completely randomly.

Pair Corralation between Flanigans Enterprises and Wingstop

Considering the 90-day investment horizon Flanigans Enterprises is expected to generate 22.46 times more return on investment than Wingstop. However, Flanigans Enterprises is 22.46 times more volatile than Wingstop. It trades about 0.05 of its potential returns per unit of risk. Wingstop is currently generating about 0.08 per unit of risk. If you would invest  3,063  in Flanigans Enterprises on September 12, 2024 and sell it today you would lose (563.00) from holding Flanigans Enterprises or give up 18.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.75%
Values	Daily Returns

Flanigans Enterprises  vs.  Wingstop

Flanigans Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Wingstop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wingstop has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Flanigans Enterprises and Wingstop

The main advantage of trading using opposite Flanigans Enterprises and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flanigans Enterprises 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.

The idea behind Flanigans Enterprises and Wingstop pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.