Correlation Between Wingstop and Monarch Casino

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

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

Diversification Opportunities for Wingstop and Monarch Casino

-0.12

Correlation Coefficient

Wingstop  Monarch Casino

Good diversification

The 3 months correlation between Wingstop and Monarch is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Monarch Casino Resort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarch Casino Resort 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 Monarch Casino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarch Casino Resort has no effect on the direction of Wingstop i.e., Wingstop and Monarch Casino go up and down completely randomly.

Pair Corralation between Wingstop and Monarch Casino

Given the investment horizon of 90 days Wingstop is expected to under-perform the Monarch Casino. In addition to that, Wingstop is 1.9 times more volatile than Monarch Casino Resort. It trades about -0.1 of its total potential returns per unit of risk. Monarch Casino Resort is currently generating about 0.01 per unit of volatility. If you would invest  7,810  in Monarch Casino Resort on December 29, 2024 and sell it today you would earn a total of  29.00  from holding Monarch Casino Resort or generate 0.37% return on investment over 90 days.

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

Wingstop  vs.  Monarch Casino Resort

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.

Monarch Casino Resort

Risk-Adjusted Performance

Insignificant

Over the last 90 days Monarch Casino Resort has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Monarch Casino is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Wingstop and Monarch Casino

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

The idea behind Wingstop and Monarch Casino Resort 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.