Correlation Between Wingstop and NIP Group

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

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

Diversification Opportunities for Wingstop and NIP Group

0.23

Correlation Coefficient

Wingstop  NIP Group

Modest diversification

The 3 months correlation between Wingstop and NIP is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and NIP Group American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIP Group American 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 NIP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIP Group American has no effect on the direction of Wingstop i.e., Wingstop and NIP Group go up and down completely randomly.

Pair Corralation between Wingstop and NIP Group

Given the investment horizon of 90 days Wingstop is expected to generate 0.27 times more return on investment than NIP Group. However, Wingstop is 3.75 times less risky than NIP Group. It trades about 0.07 of its potential returns per unit of risk. NIP Group American is currently generating about 0.01 per unit of risk. If you would invest  13,568  in Wingstop on October 10, 2024 and sell it today you would earn a total of  14,655  from holding Wingstop or generate 108.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	23.03%
Values	Daily Returns

Wingstop  vs.  NIP Group American

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 weak 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.

NIP Group American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIP Group American has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NIP Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wingstop and NIP Group

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

The idea behind Wingstop and NIP Group American 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 Transaction History module to view history of all your transactions and understand their impact on performance.