Correlation Between Shake Shack and Bloomin Brands
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Bloomin 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 Bloomin 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 Bloomin Brands, you can compare the effects of market volatilities on Shake Shack and Bloomin 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 Bloomin Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Bloomin Brands.
Diversification Opportunities for Shake Shack and Bloomin Brands
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shake and Bloomin is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Bloomin Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomin 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 Bloomin Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomin Brands has no effect on the direction of Shake Shack i.e., Shake Shack and Bloomin Brands go up and down completely randomly.
Pair Corralation between Shake Shack and Bloomin Brands
Given the investment horizon of 90 days Shake Shack is expected to generate 0.66 times more return on investment than Bloomin Brands. However, Shake Shack is 1.51 times less risky than Bloomin Brands. It trades about 0.22 of its potential returns per unit of risk. Bloomin Brands is currently generating about -0.16 per unit of risk. If you would invest 11,426 in Shake Shack on August 28, 2024 and sell it today you would earn a total of 1,516 from holding Shake Shack or generate 13.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Bloomin Brands
Performance |
| Timeline |
| Shake Shack |
| Bloomin Brands |
Shake Shack and Bloomin Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Bloomin Brands
The main advantage of trading using opposite Shake Shack and Bloomin Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Bloomin 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 Bloomin Brands will offset losses from the drop in Bloomin Brands' long position.| Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
| Bloomin Brands vs. Dine Brands Global | Bloomin Brands vs. BJs Restaurants | Bloomin Brands vs. The Cheesecake Factory | Bloomin Brands vs. Brinker International |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |