Correlation Between Wingstop and Ballys Corp

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

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

Diversification Opportunities for Wingstop and Ballys Corp

-0.59

Correlation Coefficient

Wingstop  Ballys Corp

Excellent diversification

The 3 months correlation between Wingstop and Ballys is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Ballys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballys Corp 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 Ballys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballys Corp has no effect on the direction of Wingstop i.e., Wingstop and Ballys Corp go up and down completely randomly.

Pair Corralation between Wingstop and Ballys Corp

Given the investment horizon of 90 days Wingstop is expected to under-perform the Ballys Corp. In addition to that, Wingstop is 12.11 times more volatile than Ballys Corp. It trades about -0.04 of its total potential returns per unit of risk. Ballys Corp is currently generating about 0.2 per unit of volatility. If you would invest  1,713  in Ballys Corp on August 31, 2024 and sell it today you would earn a total of  63.00  from holding Ballys Corp or generate 3.68% return on investment over 90 days.

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

Wingstop  vs.  Ballys Corp

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 latest sluggish performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Ballys Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ballys Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Ballys Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wingstop and Ballys Corp

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

The idea behind Wingstop and Ballys Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.