Correlation Between Dingdong ADR and Wingstop

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

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

Diversification Opportunities for Dingdong ADR and Wingstop

-0.84

Correlation Coefficient

Dingdong ADR  Wingstop

Pay attention - limited upside

The 3 months correlation between Dingdong and Wingstop is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dingdong ADR and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Dingdong ADR 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 Dingdong ADR 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 Dingdong ADR i.e., Dingdong ADR and Wingstop go up and down completely randomly.

Pair Corralation between Dingdong ADR and Wingstop

Considering the 90-day investment horizon Dingdong ADR is expected to under-perform the Wingstop. In addition to that, Dingdong ADR is 1.21 times more volatile than Wingstop. It trades about -0.06 of its total potential returns per unit of risk. Wingstop is currently generating about 0.08 per unit of volatility. If you would invest  25,944  in Wingstop on May 1, 2025 and sell it today you would earn a total of  3,086  from holding Wingstop or generate 11.89% return on investment over 90 days.

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

Dingdong ADR  vs.  Wingstop

Dingdong ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dingdong ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Wingstop

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wingstop are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Wingstop reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dingdong ADR and Wingstop

The main advantage of trading using opposite Dingdong ADR and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dingdong ADR 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 Dingdong ADR 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.