Correlation Between Wingstop and Allied Gaming

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

By analyzing existing cross correlation between Wingstop and Allied Gaming Entertainment, you can compare the effects of market volatilities on Wingstop and Allied Gaming 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 Allied Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Allied Gaming.

Diversification Opportunities for Wingstop and Allied Gaming

-0.08

Correlation Coefficient

Wingstop  Allied Gaming

Good diversification

The 3 months correlation between Wingstop and Allied is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Allied Gaming Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Gaming Entert 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 Allied Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Gaming Entert has no effect on the direction of Wingstop i.e., Wingstop and Allied Gaming go up and down completely randomly.

Pair Corralation between Wingstop and Allied Gaming

Given the investment horizon of 90 days Wingstop is expected to under-perform the Allied Gaming. In addition to that, Wingstop is 1.06 times more volatile than Allied Gaming Entertainment. It trades about -0.35 of its total potential returns per unit of risk. Allied Gaming Entertainment is currently generating about -0.02 per unit of volatility. If you would invest  110.00  in Allied Gaming Entertainment on December 4, 2024 and sell it today you would lose (3.00) from holding Allied Gaming Entertainment or give up 2.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Wingstop  vs.  Allied Gaming Entertainment

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.

Allied Gaming Entert

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Gaming Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Allied Gaming exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wingstop and Allied Gaming

The main advantage of trading using opposite Wingstop and Allied Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Allied Gaming 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 Allied Gaming will offset losses from the drop in Allied Gaming's long position.

The idea behind Wingstop and Allied Gaming Entertainment 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.