Correlation Between Wingstop and Flanigans Enterprises

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

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

Diversification Opportunities for Wingstop and Flanigans Enterprises

0.73

Correlation Coefficient

Wingstop  Flanigans Enterprises

Poor diversification

The 3 months correlation between Wingstop and Flanigans is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Flanigans Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flanigans Enterprises 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 Flanigans Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flanigans Enterprises has no effect on the direction of Wingstop i.e., Wingstop and Flanigans Enterprises go up and down completely randomly.

Pair Corralation between Wingstop and Flanigans Enterprises

Given the investment horizon of 90 days Wingstop is expected to under-perform the Flanigans Enterprises. In addition to that, Wingstop is 3.13 times more volatile than Flanigans Enterprises. It trades about -0.11 of its total potential returns per unit of risk. Flanigans Enterprises is currently generating about -0.07 per unit of volatility. If you would invest  2,575  in Flanigans Enterprises on October 6, 2024 and sell it today you would lose (115.00) from holding Flanigans Enterprises or give up 4.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.55%
Values	Daily Returns

Wingstop  vs.  Flanigans Enterprises

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Wingstop and Flanigans Enterprises

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

The idea behind Wingstop and Flanigans Enterprises 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.