Correlation Between Wingstop and Wynn Resorts

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

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

Diversification Opportunities for Wingstop and Wynn Resorts

0.74

Correlation Coefficient

Wingstop  Wynn Resorts

Poor diversification

The 3 months correlation between Wingstop and Wynn is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Wynn Resorts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Resorts 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 Wynn Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Resorts Limited has no effect on the direction of Wingstop i.e., Wingstop and Wynn Resorts go up and down completely randomly.

Pair Corralation between Wingstop and Wynn Resorts

Given the investment horizon of 90 days Wingstop is expected to generate 1.27 times more return on investment than Wynn Resorts. However, Wingstop is 1.27 times more volatile than Wynn Resorts Limited. It trades about 0.08 of its potential returns per unit of risk. Wynn Resorts Limited is currently generating about 0.0 per unit of risk. If you would invest  16,507  in Wingstop on October 4, 2024 and sell it today you would earn a total of  11,913  from holding Wingstop or generate 72.17% return on investment over 90 days.

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

Wingstop  vs.  Wynn Resorts 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 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.

Wynn Resorts Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wynn Resorts Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Wingstop and Wynn Resorts

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

The idea behind Wingstop and Wynn Resorts 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 Global Correlations module to find global opportunities by holding instruments from different markets.