Correlation Between Wingstop and Malibu Boats
Can any of the company-specific risk be diversified away by investing in both Wingstop and Malibu Boats 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 Malibu Boats into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Malibu Boats, you can compare the effects of market volatilities on Wingstop and Malibu Boats 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 Malibu Boats. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Malibu Boats.
Diversification Opportunities for Wingstop and Malibu Boats
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wingstop and Malibu is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Malibu Boats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malibu Boats 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 Malibu Boats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malibu Boats has no effect on the direction of Wingstop i.e., Wingstop and Malibu Boats go up and down completely randomly.
Pair Corralation between Wingstop and Malibu Boats
Given the investment horizon of 90 days Wingstop is expected to generate 1.27 times more return on investment than Malibu Boats. However, Wingstop is 1.27 times more volatile than Malibu Boats. It trades about 0.22 of its potential returns per unit of risk. Malibu Boats is currently generating about 0.07 per unit of risk. If you would invest 38,284 in Wingstop on March 21, 2024 and sell it today you would earn a total of 4,601 from holding Wingstop or generate 12.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Wingstop vs. Malibu Boats
Performance |
Timeline |
Wingstop |
Malibu Boats |
Wingstop and Malibu Boats Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wingstop and Malibu Boats
The main advantage of trading using opposite Wingstop and Malibu Boats positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Malibu Boats 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 Malibu Boats will offset losses from the drop in Malibu Boats' long position.Wingstop vs. Coca Cola Consolidated | Wingstop vs. Americold Realty Trust | Wingstop vs. Kosmos Energy | Wingstop vs. Euronav NV |
Malibu Boats vs. Thor Industries | Malibu Boats vs. BRP Inc | Malibu Boats vs. Brunswick | Malibu Boats vs. EZGO Technologies |
Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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