Correlation Between Shake Shack and Here Media
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Here Media 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 Here Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Here Media, you can compare the effects of market volatilities on Shake Shack and Here Media 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 Here Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Here Media.
Diversification Opportunities for Shake Shack and Here Media
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shake and Here is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Here Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Here Media 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 Here Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Here Media has no effect on the direction of Shake Shack i.e., Shake Shack and Here Media go up and down completely randomly.
Pair Corralation between Shake Shack and Here Media
Given the investment horizon of 90 days Shake Shack is expected to generate 0.61 times more return on investment than Here Media. However, Shake Shack is 1.63 times less risky than Here Media. It trades about 0.08 of its potential returns per unit of risk. Here Media is currently generating about 0.04 per unit of risk. If you would invest 5,475 in Shake Shack on October 11, 2024 and sell it today you would earn a total of 7,806 from holding Shake Shack or generate 142.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Shake Shack vs. Here Media
Performance |
| Timeline |
| Shake Shack |
| Here Media |
Shake Shack and Here Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Here Media
The main advantage of trading using opposite Shake Shack and Here Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Here Media 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 Here Media will offset losses from the drop in Here Media'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 |
| Here Media vs. Cracker Barrel Old | Here Media vs. Shake Shack | Here Media vs. Tenaris SA ADR | Here Media vs. Drilling Tools International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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