Correlation Between Wingstop and Atour Lifestyle

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

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

Diversification Opportunities for Wingstop and Atour Lifestyle

0.01

Correlation Coefficient

Wingstop  Atour Lifestyle

Significant diversification

The 3 months correlation between Wingstop and Atour is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Atour Lifestyle Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atour Lifestyle Holdings 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 Atour Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atour Lifestyle Holdings has no effect on the direction of Wingstop i.e., Wingstop and Atour Lifestyle go up and down completely randomly.

Pair Corralation between Wingstop and Atour Lifestyle

Given the investment horizon of 90 days Wingstop is expected to generate 1.07 times more return on investment than Atour Lifestyle. However, Wingstop is 1.07 times more volatile than Atour Lifestyle Holdings. It trades about 0.03 of its potential returns per unit of risk. Atour Lifestyle Holdings is currently generating about -0.22 per unit of risk. If you would invest  22,558  in Wingstop on January 28, 2025 and sell it today you would earn a total of  172.00  from holding Wingstop or generate 0.76% return on investment over 90 days.

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

Wingstop  vs.  Atour Lifestyle Holdings

Wingstop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wingstop has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Atour Lifestyle Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atour Lifestyle Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Wingstop and Atour Lifestyle

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

The idea behind Wingstop and Atour Lifestyle Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.