Correlation Between Fidus Investment and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Fidus Investment 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 Fidus Investment and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidus Investment Corp and Shake Shack, you can compare the effects of market volatilities on Fidus Investment 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 Fidus Investment with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidus Investment and Shake Shack.
Diversification Opportunities for Fidus Investment and Shake Shack
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidus and Shake is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Fidus Investment 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 Fidus Investment Corp 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 Fidus Investment i.e., Fidus Investment and Shake Shack go up and down completely randomly.
Pair Corralation between Fidus Investment and Shake Shack
Given the investment horizon of 90 days Fidus Investment is expected to generate 3.6 times less return on investment than Shake Shack. But when comparing it to its historical volatility, Fidus Investment Corp is 3.78 times less risky than Shake Shack. It trades about 0.12 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 5,690 in Shake Shack on September 4, 2024 and sell it today you would earn a total of 7,659 from holding Shake Shack or generate 134.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidus Investment Corp vs. Shake Shack
Performance |
| Timeline |
| Fidus Investment Corp |
| Shake Shack |
Fidus Investment and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidus Investment and Shake Shack
The main advantage of trading using opposite Fidus Investment and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidus Investment 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.| Fidus Investment vs. Golub Capital BDC | Fidus Investment vs. BlackRock TCP Capital | Fidus Investment vs. Carlyle Secured Lending | Fidus Investment vs. Sixth Street Specialty |
| Shake Shack vs. Hyatt Hotels | Shake Shack vs. Smart Share Global | Shake Shack vs. Sweetgreen | Shake Shack vs. Wyndham Hotels Resorts |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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