Correlation Between Shake Shack and DST Systems

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Can any of the company-specific risk be diversified away by investing in both Shake Shack and DST Systems 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 DST Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and DST Systems, you can compare the effects of market volatilities on Shake Shack and DST Systems 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 DST Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and DST Systems.

Diversification Opportunities for Shake Shack and DST Systems

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Shake and DST is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and DST Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DST Systems 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 DST Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DST Systems has no effect on the direction of Shake Shack i.e., Shake Shack and DST Systems go up and down completely randomly.

Pair Corralation between Shake Shack and DST Systems

If you would invest  12,356  in Shake Shack on September 4, 2024 and sell it today you would earn a total of  993.00  from holding Shake Shack or generate 8.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Shake Shack  vs.  DST Systems

 Performance 
       Timeline  
Shake Shack 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Shake Shack are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Shake Shack disclosed solid returns over the last few months and may actually be approaching a breakup point.
DST Systems 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DST Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DST Systems is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Shake Shack and DST Systems Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shake Shack and DST Systems

The main advantage of trading using opposite Shake Shack and DST Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, DST Systems 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 DST Systems will offset losses from the drop in DST Systems' long position.
The idea behind Shake Shack and DST Systems 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.
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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