Correlation Between Wingstop and Bloomin Brands

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

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

Diversification Opportunities for Wingstop and Bloomin Brands

0.15

Correlation Coefficient

Wingstop  Bloomin Brands

Average diversification

The 3 months correlation between Wingstop and Bloomin is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Bloomin Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomin Brands 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 Bloomin Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomin Brands has no effect on the direction of Wingstop i.e., Wingstop and Bloomin Brands go up and down completely randomly.

Pair Corralation between Wingstop and Bloomin Brands

Given the investment horizon of 90 days Wingstop is expected to generate 0.82 times more return on investment than Bloomin Brands. However, Wingstop is 1.22 times less risky than Bloomin Brands. It trades about 0.13 of its potential returns per unit of risk. Bloomin Brands is currently generating about 0.06 per unit of risk. If you would invest  26,898  in Wingstop on May 5, 2025 and sell it today you would earn a total of  9,347  from holding Wingstop or generate 34.75% return on investment over 90 days.

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

Wingstop  vs.  Bloomin Brands

Wingstop

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wingstop are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Wingstop reported solid returns over the last few months and may actually be approaching a breakup point.

Bloomin Brands

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bloomin Brands are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, Bloomin Brands displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wingstop and Bloomin Brands

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

The idea behind Wingstop and Bloomin Brands 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.