Correlation Between Shake Shack and Caravelle International
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Caravelle International 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 Caravelle International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Caravelle International Group, you can compare the effects of market volatilities on Shake Shack and Caravelle International 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 Caravelle International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Caravelle International.
Diversification Opportunities for Shake Shack and Caravelle International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shake and Caravelle is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Caravelle International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravelle International 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 Caravelle International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravelle International has no effect on the direction of Shake Shack i.e., Shake Shack and Caravelle International go up and down completely randomly.
Pair Corralation between Shake Shack and Caravelle International
Given the investment horizon of 90 days Shake Shack is expected to generate 0.24 times more return on investment than Caravelle International. However, Shake Shack is 4.18 times less risky than Caravelle International. It trades about -0.28 of its potential returns per unit of risk. Caravelle International Group is currently generating about -0.16 per unit of risk. If you would invest 13,327 in Shake Shack on November 3, 2024 and sell it today you would lose (1,514) from holding Shake Shack or give up 11.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Shake Shack vs. Caravelle International Group
Performance |
| Timeline |
| Shake Shack |
| Caravelle International |
Shake Shack and Caravelle International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Caravelle International
The main advantage of trading using opposite Shake Shack and Caravelle International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Caravelle International 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 Caravelle International will offset losses from the drop in Caravelle International'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 |
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 CEOs Directory module to screen CEOs from public companies around the world.
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