Correlation Between Wingstop and Everi Holdings

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

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

Diversification Opportunities for Wingstop and Everi Holdings

-0.72

Correlation Coefficient

Wingstop  Everi Holdings

Pay attention - limited upside

The 3 months correlation between Wingstop and Everi is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Everi Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everi 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 Everi Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everi Holdings has no effect on the direction of Wingstop i.e., Wingstop and Everi Holdings go up and down completely randomly.

Pair Corralation between Wingstop and Everi Holdings

Given the investment horizon of 90 days Wingstop is expected to generate 11.48 times more return on investment than Everi Holdings. However, Wingstop is 11.48 times more volatile than Everi Holdings. It trades about 0.29 of its potential returns per unit of risk. Everi Holdings is currently generating about 0.25 per unit of risk. If you would invest  28,746  in Wingstop on September 1, 2024 and sell it today you would earn a total of  4,131  from holding Wingstop or generate 14.37% return on investment over 90 days.

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

Wingstop  vs.  Everi Holdings

Wingstop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wingstop has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Everi Holdings

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everi Holdings are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Everi Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Wingstop and Everi Holdings

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

The idea behind Wingstop and Everi 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.