Correlation Between Shake Shack and Abacus Life
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Abacus Life 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 Shake Shack and Abacus Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Abacus Life, you can compare the effects of market volatilities on Shake Shack and Abacus Life 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 Shake Shack with a short position of Abacus Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Abacus Life.
Diversification Opportunities for Shake Shack and Abacus Life
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shake and Abacus is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Abacus Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abacus Life and Shake Shack 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 Shake Shack are associated (or correlated) with Abacus Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abacus Life has no effect on the direction of Shake Shack i.e., Shake Shack and Abacus Life go up and down completely randomly.
Pair Corralation between Shake Shack and Abacus Life
Given the investment horizon of 90 days Shake Shack is expected to generate 0.58 times more return on investment than Abacus Life. However, Shake Shack is 1.72 times less risky than Abacus Life. It trades about 0.05 of its potential returns per unit of risk. Abacus Life is currently generating about -0.06 per unit of risk. If you would invest 13,073 in Shake Shack on September 12, 2024 and sell it today you would earn a total of 255.00 from holding Shake Shack or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Abacus Life
Performance |
| Timeline |
| Shake Shack |
| Abacus Life |
Shake Shack and Abacus Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Abacus Life
The main advantage of trading using opposite Shake Shack and Abacus Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Abacus Life 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 Abacus Life will offset losses from the drop in Abacus Life's long position.| Shake Shack vs. Noble Romans | Shake Shack vs. Good Times Restaurants | Shake Shack vs. Flanigans Enterprises | Shake Shack vs. FAT Brands |
| Abacus Life vs. FG Annuities Life | Abacus Life vs. Globe Life | Abacus Life vs. MetLife Preferred Stock | Abacus Life vs. MetLife Preferred Stock |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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