Correlation Between Playtech Plc and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Playtech Plc 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 Playtech Plc and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech plc and Shake Shack, you can compare the effects of market volatilities on Playtech Plc 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 Playtech Plc with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Shake Shack.
Diversification Opportunities for Playtech Plc and Shake Shack
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playtech and Shake is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Playtech Plc 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 Playtech plc 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 Playtech Plc i.e., Playtech Plc and Shake Shack go up and down completely randomly.
Pair Corralation between Playtech Plc and Shake Shack
Assuming the 90 days horizon Playtech Plc is expected to generate 1.74 times less return on investment than Shake Shack. In addition to that, Playtech Plc is 1.25 times more volatile than Shake Shack. It trades about 0.1 of its total potential returns per unit of risk. Shake Shack is currently generating about 0.22 per unit of volatility. If you would invest 9,925 in Shake Shack on September 4, 2024 and sell it today you would earn a total of 3,309 from holding Shake Shack or generate 33.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playtech plc vs. Shake Shack
Performance |
| Timeline |
| Playtech plc |
| Shake Shack |
Playtech Plc and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and Shake Shack
The main advantage of trading using opposite Playtech Plc and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc 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.| Playtech Plc vs. Everi Holdings | Playtech Plc vs. Intema Solutions | Playtech Plc vs. Light Wonder | Playtech Plc vs. International Game Technology |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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