Correlation Between Wingstop and Dutch Bros

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

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

Diversification Opportunities for Wingstop and Dutch Bros

0.61

Correlation Coefficient

Wingstop  Dutch Bros

Poor diversification

The 3 months correlation between Wingstop and Dutch is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Dutch Bros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dutch Bros 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 Dutch Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dutch Bros has no effect on the direction of Wingstop i.e., Wingstop and Dutch Bros go up and down completely randomly.

Pair Corralation between Wingstop and Dutch Bros

Given the investment horizon of 90 days Wingstop is expected to generate 0.85 times more return on investment than Dutch Bros. However, Wingstop is 1.18 times less risky than Dutch Bros. It trades about 0.07 of its potential returns per unit of risk. Dutch Bros is currently generating about 0.05 per unit of risk. If you would invest  16,293  in Wingstop on May 4, 2025 and sell it today you would earn a total of  19,952  from holding Wingstop or generate 122.46% return on investment over 90 days.

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

Wingstop  vs.  Dutch Bros

Wingstop

Risk-Adjusted Performance

Good

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.

Dutch Bros

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dutch Bros has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dutch Bros is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wingstop and Dutch Bros

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

The idea behind Wingstop and Dutch Bros 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..