Correlation Between GameStop Corp and Shake Shack
Can any of the company-specific risk be diversified away by investing in both GameStop Corp 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 GameStop Corp and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Shake Shack, you can compare the effects of market volatilities on GameStop Corp 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 GameStop Corp with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Shake Shack.
Diversification Opportunities for GameStop Corp and Shake Shack
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GameStop and Shake is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and GameStop Corp 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 GameStop 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 GameStop Corp i.e., GameStop Corp and Shake Shack go up and down completely randomly.
Pair Corralation between GameStop Corp and Shake Shack
Considering the 90-day investment horizon GameStop Corp is expected to generate 1.49 times more return on investment than Shake Shack. However, GameStop Corp is 1.49 times more volatile than Shake Shack. It trades about 0.37 of its potential returns per unit of risk. Shake Shack is currently generating about 0.16 per unit of risk. If you would invest 2,241 in GameStop Corp on September 2, 2024 and sell it today you would earn a total of 664.00 from holding GameStop Corp or generate 29.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. Shake Shack
Performance |
| Timeline |
| GameStop Corp |
| Shake Shack |
GameStop Corp and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Shake Shack
The main advantage of trading using opposite GameStop Corp and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp 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.| GameStop Corp vs. RH | GameStop Corp vs. Dicks Sporting Goods | GameStop Corp vs. Best Buy Co | GameStop Corp vs. AutoZone |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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