Correlation Between Shake Shack and Everest
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Everest 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 Everest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Everest Group, you can compare the effects of market volatilities on Shake Shack and Everest 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 Everest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Everest.
Diversification Opportunities for Shake Shack and Everest
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shake and Everest is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Everest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everest 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 Everest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everest Group has no effect on the direction of Shake Shack i.e., Shake Shack and Everest go up and down completely randomly.
Pair Corralation between Shake Shack and Everest
Given the investment horizon of 90 days Shake Shack is expected to generate 1.22 times more return on investment than Everest. However, Shake Shack is 1.22 times more volatile than Everest Group. It trades about 0.16 of its potential returns per unit of risk. Everest Group is currently generating about 0.01 per unit of risk. If you would invest 10,466 in Shake Shack on August 28, 2024 and sell it today you would earn a total of 2,476 from holding Shake Shack or generate 23.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Everest Group
Performance |
| Timeline |
| Shake Shack |
| Everest Group |
Shake Shack and Everest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Everest
The main advantage of trading using opposite Shake Shack and Everest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Everest 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 Everest will offset losses from the drop in Everest's long position.| Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
| Everest vs. Brookfield Wealth Solutions | Everest vs. Reinsurance Group of | Everest vs. Renaissancere Holdings | Everest vs. Greenlight Capital Re |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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