Correlation Between Wingstop and One Group

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

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

Diversification Opportunities for Wingstop and One Group

0.7

Correlation Coefficient

Wingstop  One Group

Poor diversification

The 3 months correlation between Wingstop and One is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and One Group Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Group Hospitality 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 One Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Group Hospitality has no effect on the direction of Wingstop i.e., Wingstop and One Group go up and down completely randomly.

Pair Corralation between Wingstop and One Group

Given the investment horizon of 90 days Wingstop is expected to generate 1.02 times more return on investment than One Group. However, Wingstop is 1.02 times more volatile than One Group Hospitality. It trades about -0.24 of its potential returns per unit of risk. One Group Hospitality is currently generating about -0.26 per unit of risk. If you would invest  33,730  in Wingstop on October 6, 2024 and sell it today you would lose (3,929) from holding Wingstop or give up 11.65% of portfolio value over 90 days.

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

Wingstop  vs.  One Group Hospitality

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 fragile 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.

One Group Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days One Group Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Wingstop and One Group

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

The idea behind Wingstop and One Group Hospitality 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.