Correlation Between Wingstop and NeogamesSA

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Can any of the company-specific risk be diversified away by investing in both Wingstop and NeogamesSA 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 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

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between Wingstop and NeogamesSA is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and NeogamesSA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeogamesSA 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 NeogamesSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeogamesSA has no effect on the direction of Wingstop i.e., Wingstop and NeogamesSA go up and down completely randomly.

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.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Wingstop  vs.  NeogamesSA

 Performance 
       Timeline  
Wingstop 

Risk-Adjusted Performance

27 of 100

 
Low
 
High
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Wingstop are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Wingstop reported solid returns over the last few months and may actually be approaching a breakup point.
NeogamesSA 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in NeogamesSA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, NeogamesSA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Wingstop and NeogamesSA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wingstop and NeogamesSA

The 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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