Correlation Between Partner Communications and Wingstop

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

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

Diversification Opportunities for Partner Communications and Wingstop

-0.63

Correlation Coefficient

Partner Communications  Wingstop

Excellent diversification

The 3 months correlation between Partner and Wingstop is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Partner Communications and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Partner Communications 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 Partner Communications 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 Partner Communications i.e., Partner Communications and Wingstop go up and down completely randomly.

Pair Corralation between Partner Communications and Wingstop

Assuming the 90 days horizon Partner Communications is expected to generate 0.29 times more return on investment than Wingstop. However, Partner Communications is 3.47 times less risky than Wingstop. It trades about 0.22 of its potential returns per unit of risk. Wingstop is currently generating about -0.28 per unit of risk. If you would invest  695.00  in Partner Communications on December 2, 2024 and sell it today you would earn a total of  35.00  from holding Partner Communications or generate 5.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Partner Communications  vs.  Wingstop

Partner Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Partner Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Partner Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Wingstop

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Partner Communications and Wingstop

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

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.