Correlation Between Wingstop and MakeMyTrip

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

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

Diversification Opportunities for Wingstop and MakeMyTrip

-0.53

Correlation Coefficient

Wingstop  MakeMyTrip

Excellent diversification

The 3 months correlation between Wingstop and MakeMyTrip is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and MakeMyTrip Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MakeMyTrip Limited 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 MakeMyTrip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MakeMyTrip Limited has no effect on the direction of Wingstop i.e., Wingstop and MakeMyTrip go up and down completely randomly.

Pair Corralation between Wingstop and MakeMyTrip

Given the investment horizon of 90 days Wingstop is expected to under-perform the MakeMyTrip. In addition to that, Wingstop is 1.05 times more volatile than MakeMyTrip Limited. It trades about -0.3 of its total potential returns per unit of risk. MakeMyTrip Limited is currently generating about 0.06 per unit of volatility. If you would invest  10,873  in MakeMyTrip Limited on September 23, 2024 and sell it today you would earn a total of  227.00  from holding MakeMyTrip Limited or generate 2.09% 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.  MakeMyTrip Limited

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

MakeMyTrip Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MakeMyTrip Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MakeMyTrip is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wingstop and MakeMyTrip

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

The idea behind Wingstop and MakeMyTrip Limited 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.