Correlation Between Transocean and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Transocean 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 Transocean and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transocean and Shake Shack, you can compare the effects of market volatilities on Transocean 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 Transocean with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transocean and Shake Shack.
Diversification Opportunities for Transocean and Shake Shack
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Transocean and Shake is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Transocean and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Transocean 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 Transocean 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 Transocean i.e., Transocean and Shake Shack go up and down completely randomly.
Pair Corralation between Transocean and Shake Shack
Considering the 90-day investment horizon Transocean is expected to under-perform the Shake Shack. In addition to that, Transocean is 1.18 times more volatile than Shake Shack. It trades about -0.01 of its total potential returns per unit of risk. Shake Shack is currently generating about 0.17 per unit of volatility. If you would invest 12,356 in Shake Shack on September 4, 2024 and sell it today you would earn a total of 993.00 from holding Shake Shack or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transocean vs. Shake Shack
Performance |
| Timeline |
| Transocean |
| Shake Shack |
Transocean and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transocean and Shake Shack
The main advantage of trading using opposite Transocean and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transocean 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.| Transocean vs. Precision Drilling | Transocean vs. Sable Offshore Corp | Transocean vs. Patterson UTI Energy | Transocean vs. Seadrill Limited |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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