Correlation Between Dupont De and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Dupont De and Shake Shack 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 Dupont De and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dupont De Nemours and Shake Shack, you can compare the effects of market volatilities on Dupont De and Shake Shack 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 Dupont De with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Shake Shack.
Diversification Opportunities for Dupont De and Shake Shack
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dupont and Shake is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Dupont De 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 Dupont De Nemours are associated (or correlated) with Shake Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shake Shack has no effect on the direction of Dupont De i.e., Dupont De and Shake Shack go up and down completely randomly.
Pair Corralation between Dupont De and Shake Shack
Allowing for the 90-day total investment horizon Dupont De is expected to generate 4.24 times less return on investment than Shake Shack. But when comparing it to its historical volatility, Dupont De Nemours is 1.88 times less risky than Shake Shack. It trades about 0.05 of its potential returns per unit of risk. Shake Shack is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,166 in Shake Shack on August 27, 2024 and sell it today you would earn a total of 6,135 from holding Shake Shack or generate 99.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. Shake Shack
Performance |
| Timeline |
| Dupont De Nemours |
| Shake Shack |
Dupont De and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Shake Shack
The main advantage of trading using opposite Dupont De and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Shake Shack 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 Shake Shack will offset losses from the drop in Shake Shack's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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