Correlation Between Wingstop and E Home

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

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

Diversification Opportunities for Wingstop and E Home

0.69

Correlation Coefficient

Wingstop  E Home

Poor diversification

The 3 months correlation between Wingstop and EJH is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and E Home Household Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Home Household 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 E Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Home Household has no effect on the direction of Wingstop i.e., Wingstop and E Home go up and down completely randomly.

Pair Corralation between Wingstop and E Home

Given the investment horizon of 90 days Wingstop is expected to under-perform the E Home. But the stock apears to be less risky and, when comparing its historical volatility, Wingstop is 2.28 times less risky than E Home. The stock trades about -0.11 of its potential returns per unit of risk. The E Home Household Service is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  100.00  in E Home Household Service on October 6, 2024 and sell it today you would lose (22.00) from holding E Home Household Service or give up 22.0% of portfolio value over 90 days.

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

Wingstop  vs.  E Home Household Service

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.

E Home Household

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E Home Household Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Wingstop and E Home

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

The idea behind Wingstop and E Home Household Service 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.