Correlation Between Shake Shack and Acco Brands
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Acco Brands 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 Acco Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Acco Brands, you can compare the effects of market volatilities on Shake Shack and Acco Brands 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 Acco Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Acco Brands.
Diversification Opportunities for Shake Shack and Acco Brands
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shake and Acco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands 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 Acco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acco Brands has no effect on the direction of Shake Shack i.e., Shake Shack and Acco Brands go up and down completely randomly.
Pair Corralation between Shake Shack and Acco Brands
Given the investment horizon of 90 days Shake Shack is expected to under-perform the Acco Brands. In addition to that, Shake Shack is 1.48 times more volatile than Acco Brands. It trades about -0.32 of its total potential returns per unit of risk. Acco Brands is currently generating about -0.17 per unit of volatility. If you would invest 543.00 in Acco Brands on October 20, 2024 and sell it today you would lose (23.00) from holding Acco Brands or give up 4.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Acco Brands
Performance |
| Timeline |
| Shake Shack |
| Acco Brands |
Shake Shack and Acco Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Acco Brands
The main advantage of trading using opposite Shake Shack and Acco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Acco Brands 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 Acco Brands will offset losses from the drop in Acco Brands' long position.| Shake Shack vs. Dominos Pizza Common | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
| Acco Brands vs. HNI Corp | Acco Brands vs. Steelcase | Acco Brands vs. Ennis Inc | Acco Brands vs. Acacia Research |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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