Correlation Between FitLife Brands, and Shake Shack
Can any of the company-specific risk be diversified away by investing in both FitLife Brands, 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 FitLife Brands, and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FitLife Brands, Common and Shake Shack, you can compare the effects of market volatilities on FitLife Brands, 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 FitLife Brands, with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of FitLife Brands, and Shake Shack.
Diversification Opportunities for FitLife Brands, and Shake Shack
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between FitLife and Shake is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding FitLife Brands, Common and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and FitLife Brands, 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 FitLife Brands, Common 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 FitLife Brands, i.e., FitLife Brands, and Shake Shack go up and down completely randomly.
Pair Corralation between FitLife Brands, and Shake Shack
Given the investment horizon of 90 days FitLife Brands, is expected to generate 1.35 times less return on investment than Shake Shack. But when comparing it to its historical volatility, FitLife Brands, Common is 1.04 times less risky than Shake Shack. It trades about 0.08 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 6,683 in Shake Shack on September 5, 2024 and sell it today you would earn a total of 6,551 from holding Shake Shack or generate 98.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FitLife Brands, Common vs. Shake Shack
Performance |
| Timeline |
| FitLife Brands, Common |
| Shake Shack |
FitLife Brands, and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FitLife Brands, and Shake Shack
The main advantage of trading using opposite FitLife Brands, and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FitLife Brands, 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.| FitLife Brands, vs. Noble Romans | FitLife Brands, vs. Greystone Logistics | FitLife Brands, vs. Innovative Food Hldg | FitLife Brands, vs. Galaxy Gaming |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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