Correlation Between Shake Shack and Delta Oil
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Delta Oil 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 Delta Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Delta Oil Gas, you can compare the effects of market volatilities on Shake Shack and Delta Oil 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 Delta Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Delta Oil.
Diversification Opportunities for Shake Shack and Delta Oil
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shake and Delta is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Delta Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Oil Gas 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 Delta Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Oil Gas has no effect on the direction of Shake Shack i.e., Shake Shack and Delta Oil go up and down completely randomly.
Pair Corralation between Shake Shack and Delta Oil
Given the investment horizon of 90 days Shake Shack is expected to generate 55.78 times less return on investment than Delta Oil. But when comparing it to its historical volatility, Shake Shack is 43.13 times less risky than Delta Oil. It trades about 0.09 of its potential returns per unit of risk. Delta Oil Gas is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Delta Oil Gas on September 3, 2024 and sell it today you would lose (11.00) from holding Delta Oil Gas or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.16% |
| Values | Daily Returns |
Shake Shack vs. Delta Oil Gas
Performance |
| Timeline |
| Shake Shack |
| Delta Oil Gas |
Shake Shack and Delta Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Delta Oil
The main advantage of trading using opposite Shake Shack and Delta Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Delta Oil 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 Delta Oil will offset losses from the drop in Delta Oil's long position.| Shake Shack vs. Highway Holdings Limited | Shake Shack vs. QCR Holdings | Shake Shack vs. Partner Communications | Shake Shack vs. Acumen Pharmaceuticals |
| Delta Oil vs. Jackson Financial | Delta Oil vs. Tat Techno | Delta Oil vs. OppFi Inc | Delta Oil vs. Apple Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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