Correlation Between Maiden Holdings and Wingstop

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

By analyzing existing cross correlation between Maiden Holdings and Wingstop, you can compare the effects of market volatilities on Maiden Holdings and Wingstop 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 Maiden Holdings with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maiden Holdings and Wingstop.

Diversification Opportunities for Maiden Holdings and Wingstop

-0.42

Correlation Coefficient

Maiden Holdings  Wingstop

Very good diversification

The 3 months correlation between Maiden and Wingstop is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Maiden Holdings and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Maiden Holdings 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 Maiden Holdings are associated (or correlated) with Wingstop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wingstop has no effect on the direction of Maiden Holdings i.e., Maiden Holdings and Wingstop go up and down completely randomly.

Pair Corralation between Maiden Holdings and Wingstop

Given the investment horizon of 90 days Maiden Holdings is expected to under-perform the Wingstop. But the stock apears to be less risky and, when comparing its historical volatility, Maiden Holdings is 1.26 times less risky than Wingstop. The stock trades about -0.27 of its potential returns per unit of risk. The Wingstop is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  36,253  in Wingstop on February 24, 2024 and sell it today you would earn a total of  1,859  from holding Wingstop or generate 5.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Maiden Holdings  vs.  Wingstop

Maiden Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maiden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Maiden Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Wingstop

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wingstop are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Wingstop may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Maiden Holdings and Wingstop

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

The idea behind Maiden Holdings and Wingstop 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.