Correlation Between Wingstop and Tillys

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

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

Diversification Opportunities for Wingstop and Tillys

0.7

Correlation Coefficient

Wingstop  Tillys

Poor diversification

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

Pair Corralation between Wingstop and Tillys

Given the investment horizon of 90 days Wingstop is expected to under-perform the Tillys. But the stock apears to be less risky and, when comparing its historical volatility, Wingstop is 1.18 times less risky than Tillys. The stock trades about -0.04 of its potential returns per unit of risk. The Tillys Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  512.00  in Tillys Inc on September 3, 2024 and sell it today you would lose (44.00) from holding Tillys Inc or give up 8.59% of portfolio value over 90 days.

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

Wingstop  vs.  Tillys Inc

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Tillys Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tillys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tillys is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wingstop and Tillys

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

The idea behind Wingstop and Tillys Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.