Correlation Between E Home and Shake Shack
Can any of the company-specific risk be diversified away by investing in both E Home 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 E Home and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Home Household Service and Shake Shack, you can compare the effects of market volatilities on E Home 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 E Home with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Home and Shake Shack.
Diversification Opportunities for E Home and Shake Shack
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EJH and Shake is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding E Home Household Service and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and E Home 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 E Home Household Service 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 E Home i.e., E Home and Shake Shack go up and down completely randomly.
Pair Corralation between E Home and Shake Shack
Considering the 90-day investment horizon E Home Household Service is expected to under-perform the Shake Shack. In addition to that, E Home is 3.75 times more volatile than Shake Shack. It trades about -0.05 of its total potential returns per unit of risk. Shake Shack is currently generating about 0.05 per unit of volatility. If you would invest 5,491 in Shake Shack on December 6, 2024 and sell it today you would earn a total of 4,243 from holding Shake Shack or generate 77.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Home Household Service vs. Shake Shack
Performance |
| Timeline |
| E Home Household |
| Shake Shack |
E Home and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Home and Shake Shack
The main advantage of trading using opposite E Home and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Home 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.| E Home vs. Smart Share Global | E Home vs. WW International | E Home vs. Frontdoor | E Home vs. Carriage Services |
| Shake Shack vs. Dominos Pizza Common | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |