Correlation Between Shake Shack and Galaxy Entertainment
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Galaxy Entertainment 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 Galaxy Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Galaxy Entertainment Group, you can compare the effects of market volatilities on Shake Shack and Galaxy Entertainment 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 Galaxy Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Galaxy Entertainment.
Diversification Opportunities for Shake Shack and Galaxy Entertainment
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shake and Galaxy is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Galaxy Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Entertainment 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 Galaxy Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Entertainment has no effect on the direction of Shake Shack i.e., Shake Shack and Galaxy Entertainment go up and down completely randomly.
Pair Corralation between Shake Shack and Galaxy Entertainment
Given the investment horizon of 90 days Shake Shack is expected to under-perform the Galaxy Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Shake Shack is 3.28 times less risky than Galaxy Entertainment. The stock trades about -0.28 of its potential returns per unit of risk. The Galaxy Entertainment Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 423.00 in Galaxy Entertainment Group on November 3, 2024 and sell it today you would earn a total of 61.00 from holding Galaxy Entertainment Group or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Galaxy Entertainment Group
Performance |
| Timeline |
| Shake Shack |
| Galaxy Entertainment |
Shake Shack and Galaxy Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Galaxy Entertainment
The main advantage of trading using opposite Shake Shack and Galaxy Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Galaxy Entertainment 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 Galaxy Entertainment will offset losses from the drop in Galaxy Entertainment's long position.| Shake Shack vs. Dominos Pizza Common | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
| Galaxy Entertainment vs. American Airlines Group | Galaxy Entertainment vs. Playtech plc | Galaxy Entertainment vs. Hasbro Inc | Galaxy Entertainment vs. SkyWest |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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