Correlation Between Bank of America and Wingstop
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Wingstop, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Wingstop.
Diversification Opportunities for Bank of America and Wingstop
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Wingstop is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and Bank of America 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 Bank of America 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 Bank of America i.e., Bank of America and Wingstop go up and down completely randomly.
Pair Corralation between Bank of America and Wingstop
Considering the 90-day investment horizon Bank of America is expected to generate 1.46 times less return on investment than Wingstop. But when comparing it to its historical volatility, Bank of America is 1.64 times less risky than Wingstop. It trades about 0.07 of its potential returns per unit of risk. Wingstop is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 18,813 in Wingstop on March 26, 2025 and sell it today you would earn a total of 17,930 from holding Wingstop or generate 95.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bank of America vs. Wingstop
Performance |
| Timeline |
| Bank of America |
| Wingstop |
Bank of America and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Wingstop
The main advantage of trading using opposite Bank of America and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza Common |
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.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Transaction History View history of all your transactions and understand their impact on performance |