Correlation Between Shake Shack and Kura Sushi
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Kura Sushi 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 Kura Sushi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Kura Sushi USA, you can compare the effects of market volatilities on Shake Shack and Kura Sushi 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 Kura Sushi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Kura Sushi.
Diversification Opportunities for Shake Shack and Kura Sushi
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shake and Kura is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Kura Sushi USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi USA 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 Kura Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Sushi USA has no effect on the direction of Shake Shack i.e., Shake Shack and Kura Sushi go up and down completely randomly.
Pair Corralation between Shake Shack and Kura Sushi
Given the investment horizon of 90 days Shake Shack is expected to generate 0.72 times more return on investment than Kura Sushi. However, Shake Shack is 1.38 times less risky than Kura Sushi. It trades about 0.11 of its potential returns per unit of risk. Kura Sushi USA is currently generating about 0.07 per unit of risk. If you would invest 6,206 in Shake Shack on August 29, 2024 and sell it today you would earn a total of 7,055 from holding Shake Shack or generate 113.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Kura Sushi USA
Performance |
| Timeline |
| Shake Shack |
| Kura Sushi USA |
Shake Shack and Kura Sushi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Kura Sushi
The main advantage of trading using opposite Shake Shack and Kura Sushi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Kura Sushi 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 Kura Sushi will offset losses from the drop in Kura Sushi's long position.| Shake Shack vs. Jack In The | Shake Shack vs. Potbelly Co | Shake Shack vs. BJs Restaurants | Shake Shack vs. One Group Hospitality |
| Kura Sushi vs. Jack In The | Kura Sushi vs. Potbelly Co | Kura Sushi vs. BJs Restaurants | Kura Sushi vs. One Group Hospitality |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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