Correlation Between Shake Shack and Afya
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Afya 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 Afya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Afya, you can compare the effects of market volatilities on Shake Shack and Afya 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 Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Afya.
Diversification Opportunities for Shake Shack and Afya
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shake and Afya is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya 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 Afya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afya has no effect on the direction of Shake Shack i.e., Shake Shack and Afya go up and down completely randomly.
Pair Corralation between Shake Shack and Afya
Given the investment horizon of 90 days Shake Shack is expected to under-perform the Afya. In addition to that, Shake Shack is 1.23 times more volatile than Afya. It trades about -0.32 of its total potential returns per unit of risk. Afya is currently generating about 0.12 per unit of volatility. If you would invest 1,524 in Afya on October 20, 2024 and sell it today you would earn a total of 50.00 from holding Afya or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Afya
Performance |
| Timeline |
| Shake Shack |
| Afya |
Shake Shack and Afya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Afya
The main advantage of trading using opposite Shake Shack and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Afya 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 Afya will offset losses from the drop in Afya's 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 |
| Afya vs. Adtalem Global Education | Afya vs. Laureate Education | Afya vs. American Public Education | Afya vs. Strategic Education |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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