Correlation Between BRF SA and Wingstop
Can any of the company-specific risk be diversified away by investing in both BRF SA 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 BRF SA and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRF SA ADR and Wingstop, you can compare the effects of market volatilities on BRF SA 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 BRF SA with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRF SA and Wingstop.
Diversification Opportunities for BRF SA and Wingstop
Weak diversification
The 3 months correlation between BRF and Wingstop is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BRF SA ADR and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and BRF SA 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 BRF SA ADR 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 BRF SA i.e., BRF SA and Wingstop go up and down completely randomly.
Pair Corralation between BRF SA and Wingstop
Given the investment horizon of 90 days BRF SA ADR is expected to generate 1.2 times more return on investment than Wingstop. However, BRF SA is 1.2 times more volatile than Wingstop. It trades about 0.16 of its potential returns per unit of risk. Wingstop is currently generating about 0.16 per unit of risk. If you would invest 360.00 in BRF SA ADR on March 26, 2025 and sell it today you would earn a total of 28.00 from holding BRF SA ADR or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRF SA ADR vs. Wingstop
Performance |
| Timeline |
| BRF SA ADR |
| Wingstop |
BRF SA and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRF SA and Wingstop
The main advantage of trading using opposite BRF SA and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRF SA 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.| BRF SA vs. Marfrig Global Foods | BRF SA vs. Pilgrims Pride Corp | BRF SA vs. John B Sanfilippo | BRF SA vs. Seneca Foods Corp |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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