Correlation Between Shake Shack and Dalata Hotel
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Dalata Hotel 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 Dalata Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Dalata Hotel Group, you can compare the effects of market volatilities on Shake Shack and Dalata Hotel 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 Dalata Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Dalata Hotel.
Diversification Opportunities for Shake Shack and Dalata Hotel
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shake and Dalata is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group 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 Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of Shake Shack i.e., Shake Shack and Dalata Hotel go up and down completely randomly.
Pair Corralation between Shake Shack and Dalata Hotel
Given the investment horizon of 90 days Shake Shack is expected to generate 21.44 times more return on investment than Dalata Hotel. However, Shake Shack is 21.44 times more volatile than Dalata Hotel Group. It trades about 0.2 of its potential returns per unit of risk. Dalata Hotel Group is currently generating about 0.13 per unit of risk. If you would invest 10,142 in Shake Shack on August 29, 2024 and sell it today you would earn a total of 3,119 from holding Shake Shack or generate 30.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Shake Shack vs. Dalata Hotel Group
Performance |
| Timeline |
| Shake Shack |
| Dalata Hotel Group |
Shake Shack and Dalata Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Dalata Hotel
The main advantage of trading using opposite Shake Shack and Dalata Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Dalata Hotel 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 Dalata Hotel will offset losses from the drop in Dalata Hotel's long position.| Shake Shack vs. Jack In The | Shake Shack vs. Potbelly Co | Shake Shack vs. BJs Restaurants | Shake Shack vs. One Group Hospitality |
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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 Stocks Directory module to find actively traded stocks across global markets.
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