Correlation Between Wingstop and Rush Street

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

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

Diversification Opportunities for Wingstop and Rush Street

0.87

Correlation Coefficient

Wingstop  Rush Street

Very poor diversification

The 3 months correlation between Wingstop and Rush is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Rush Street Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rush Street Interactive 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 Rush Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rush Street Interactive has no effect on the direction of Wingstop i.e., Wingstop and Rush Street go up and down completely randomly.

Pair Corralation between Wingstop and Rush Street

Given the investment horizon of 90 days Wingstop is expected to under-perform the Rush Street. But the stock apears to be less risky and, when comparing its historical volatility, Wingstop is 1.34 times less risky than Rush Street. The stock trades about -0.1 of its potential returns per unit of risk. The Rush Street Interactive is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,361  in Rush Street Interactive on December 28, 2024 and sell it today you would lose (262.00) from holding Rush Street Interactive or give up 19.25% of portfolio value over 90 days.

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

Wingstop  vs.  Rush Street Interactive

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.

Rush Street Interactive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rush Street Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Wingstop and Rush Street

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

The idea behind Wingstop and Rush Street Interactive 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.