Correlation Between Shake Shack and Gap,
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Gap, 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 Gap, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and The Gap,, you can compare the effects of market volatilities on Shake Shack and Gap, 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 Gap,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Gap,.
Diversification Opportunities for Shake Shack and Gap,
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shake and Gap, is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, 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 Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Shake Shack i.e., Shake Shack and Gap, go up and down completely randomly.
Pair Corralation between Shake Shack and Gap,
Given the investment horizon of 90 days Shake Shack is expected to generate 0.9 times more return on investment than Gap,. However, Shake Shack is 1.11 times less risky than Gap,. It trades about 0.1 of its potential returns per unit of risk. The Gap, is currently generating about 0.04 per unit of risk. If you would invest 7,168 in Shake Shack on September 12, 2024 and sell it today you would earn a total of 6,649 from holding Shake Shack or generate 92.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. The Gap,
Performance |
| Timeline |
| Shake Shack |
| Gap, |
Shake Shack and Gap, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Gap,
The main advantage of trading using opposite Shake Shack and Gap, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Gap, 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 Gap, will offset losses from the drop in Gap,'s long position.| Shake Shack vs. Noble Romans | Shake Shack vs. Flanigans Enterprises | Shake Shack vs. FAT Brands | Shake Shack vs. El Pollo Loco |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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