Correlation Between Wingstop and Fitell Ordinary

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

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

Diversification Opportunities for Wingstop and Fitell Ordinary

0.65

Correlation Coefficient

Wingstop  Fitell Ordinary

Poor diversification

The 3 months correlation between Wingstop and Fitell is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Fitell Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fitell Ordinary 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 Fitell Ordinary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fitell Ordinary has no effect on the direction of Wingstop i.e., Wingstop and Fitell Ordinary go up and down completely randomly.

Pair Corralation between Wingstop and Fitell Ordinary

Given the investment horizon of 90 days Wingstop is expected to generate 0.22 times more return on investment than Fitell Ordinary. However, Wingstop is 4.58 times less risky than Fitell Ordinary. It trades about -0.1 of its potential returns per unit of risk. Fitell Ordinary is currently generating about -0.21 per unit of risk. If you would invest  28,680  in Wingstop on December 29, 2024 and sell it today you would lose (5,751) from holding Wingstop or give up 20.05% of portfolio value over 90 days.

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

Wingstop  vs.  Fitell Ordinary

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.

Fitell Ordinary

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fitell Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Wingstop and Fitell Ordinary

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

The idea behind Wingstop and Fitell Ordinary 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.