diversifiable risk of combining Wingstop and NeogamesSA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and NeogamesSA, you can compare the effects of market volatilities on Wingstop and NeogamesSA 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 NeogamesSA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and NeogamesSA.
Diversification Opportunities for Wingstop and NeogamesSA
Pair Corralation between Wingstop and NeogamesSA
Given the investment horizon of 90 days Wingstop is expected to generate 7.95 times more return on investment than NeogamesSA. However, Wingstop is 7.95 times more volatile than NeogamesSA. It trades about 0.48 of its potential returns per unit of risk. NeogamesSA is currently generating about 0.25 per unit of risk. If you would invest 28,759 in Wingstop on December 3, 2023 and sell it today you would earn a total of 7,869 from holding Wingstop or generate 27.36% return on investment over 90 days.
Wingstop vs. NeogamesSA
Pair Trading with Wingstop and NeogamesSAThe main advantage of trading using opposite Wingstop and NeogamesSA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, NeogamesSA 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 NeogamesSA will offset losses from the drop in NeogamesSA's long position. The idea behind Wingstop and NeogamesSA 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.
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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