Correlation Between Shake Shack and Definitive Healthcare
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Definitive Healthcare 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 Definitive Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Definitive Healthcare Corp, you can compare the effects of market volatilities on Shake Shack and Definitive Healthcare 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 Definitive Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Definitive Healthcare.
Diversification Opportunities for Shake Shack and Definitive Healthcare
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shake and Definitive is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Definitive Healthcare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definitive Healthcare 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 Definitive Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definitive Healthcare has no effect on the direction of Shake Shack i.e., Shake Shack and Definitive Healthcare go up and down completely randomly.
Pair Corralation between Shake Shack and Definitive Healthcare
Given the investment horizon of 90 days Shake Shack is expected to generate 1.45 times less return on investment than Definitive Healthcare. But when comparing it to its historical volatility, Shake Shack is 1.34 times less risky than Definitive Healthcare. It trades about 0.09 of its potential returns per unit of risk. Definitive Healthcare Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 355.00 in Definitive Healthcare Corp on November 3, 2024 and sell it today you would earn a total of 131.00 from holding Definitive Healthcare Corp or generate 36.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Definitive Healthcare Corp
Performance |
| Timeline |
| Shake Shack |
| Definitive Healthcare |
Shake Shack and Definitive Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Definitive Healthcare
The main advantage of trading using opposite Shake Shack and Definitive Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Definitive Healthcare 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 Definitive Healthcare will offset losses from the drop in Definitive Healthcare'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 |
| Definitive Healthcare vs. National Research Corp | Definitive Healthcare vs. Evolent Health | Definitive Healthcare vs. Simulations Plus | Definitive Healthcare vs. Privia Health Group |
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.
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