Correlation Between Old Republic and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Old Republic 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 Old Republic and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Shake Shack, you can compare the effects of market volatilities on Old Republic 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 Old Republic with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Shake Shack.
Diversification Opportunities for Old Republic and Shake Shack
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Shake is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and Shake Shack go up and down completely randomly.
Pair Corralation between Old Republic and Shake Shack
Considering the 90-day investment horizon Old Republic International is expected to generate 0.46 times more return on investment than Shake Shack. However, Old Republic International is 2.19 times less risky than Shake Shack. It trades about 0.54 of its potential returns per unit of risk. Shake Shack is currently generating about 0.18 per unit of risk. If you would invest 3,465 in Old Republic International on September 3, 2024 and sell it today you would earn a total of 432.00 from holding Old Republic International or generate 12.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Republic International vs. Shake Shack
Performance |
| Timeline |
| Old Republic Interna |
| Shake Shack |
Old Republic and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Shake Shack
The main advantage of trading using opposite Old Republic and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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.| Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
| Shake Shack vs. Highway Holdings Limited | Shake Shack vs. QCR Holdings | Shake Shack vs. Partner Communications | Shake Shack vs. Acumen Pharmaceuticals |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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