Correlation Between Shake Shack and Aegean Airlines
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Aegean Airlines 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 Aegean Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Aegean Airlines SA, you can compare the effects of market volatilities on Shake Shack and Aegean Airlines 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 Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Aegean Airlines.
Diversification Opportunities for Shake Shack and Aegean Airlines
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shake and Aegean is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA 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 Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of Shake Shack i.e., Shake Shack and Aegean Airlines go up and down completely randomly.
Pair Corralation between Shake Shack and Aegean Airlines
Given the investment horizon of 90 days Shake Shack is expected to generate 1.05 times more return on investment than Aegean Airlines. However, Shake Shack is 1.05 times more volatile than Aegean Airlines SA. It trades about 0.16 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about -0.21 per unit of risk. If you would invest 12,410 in Shake Shack on September 2, 2024 and sell it today you would earn a total of 963.00 from holding Shake Shack or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Shake Shack vs. Aegean Airlines SA
Performance |
| Timeline |
| Shake Shack |
| Aegean Airlines SA |
Shake Shack and Aegean Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Aegean Airlines
The main advantage of trading using opposite Shake Shack and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Aegean Airlines 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 Aegean Airlines will offset losses from the drop in Aegean Airlines' long position.The idea behind Shake Shack and Aegean Airlines SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aegean Airlines vs. Legacy Education | Aegean Airlines vs. Apple Inc | Aegean Airlines vs. NVIDIA | Aegean Airlines vs. Microsoft |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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