Correlation Between Revolve Group and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Revolve Group 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 Revolve Group and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Revolve Group LLC and Shake Shack, you can compare the effects of market volatilities on Revolve Group 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 Revolve Group with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Revolve Group and Shake Shack.
Diversification Opportunities for Revolve Group and Shake Shack
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Revolve and Shake is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Revolve Group LLC and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Revolve Group 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 Revolve Group LLC 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 Revolve Group i.e., Revolve Group and Shake Shack go up and down completely randomly.
Pair Corralation between Revolve Group and Shake Shack
Given the investment horizon of 90 days Revolve Group LLC is expected to generate 1.3 times more return on investment than Shake Shack. However, Revolve Group is 1.3 times more volatile than Shake Shack. It trades about 0.17 of its potential returns per unit of risk. Shake Shack is currently generating about 0.13 per unit of risk. If you would invest 3,351 in Revolve Group LLC on September 15, 2024 and sell it today you would earn a total of 358.00 from holding Revolve Group LLC or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Revolve Group LLC vs. Shake Shack
Performance |
| Timeline |
| Revolve Group LLC |
| Shake Shack |
Revolve Group and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Revolve Group and Shake Shack
The main advantage of trading using opposite Revolve Group and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Revolve Group 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.| Revolve Group vs. Capri Holdings | Revolve Group vs. Movado Group | Revolve Group vs. Tapestry | Revolve Group vs. Brilliant Earth Group |
| Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
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.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |