Correlation Between Shake Shack and National CineMedia
Can any of the company-specific risk be diversified away by investing in both Shake Shack and National CineMedia 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 National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and National CineMedia, you can compare the effects of market volatilities on Shake Shack and National CineMedia 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 National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and National CineMedia.
Diversification Opportunities for Shake Shack and National CineMedia
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shake and National is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of Shake Shack i.e., Shake Shack and National CineMedia go up and down completely randomly.
Pair Corralation between Shake Shack and National CineMedia
Given the investment horizon of 90 days Shake Shack is expected to generate 4.96 times less return on investment than National CineMedia. In addition to that, Shake Shack is 1.25 times more volatile than National CineMedia. It trades about 0.05 of its total potential returns per unit of risk. National CineMedia is currently generating about 0.31 per unit of volatility. If you would invest 652.00 in National CineMedia on September 12, 2024 and sell it today you would earn a total of 82.00 from holding National CineMedia or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. National CineMedia
Performance |
| Timeline |
| Shake Shack |
| National CineMedia |
Shake Shack and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and National CineMedia
The main advantage of trading using opposite Shake Shack and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, National CineMedia 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 National CineMedia will offset losses from the drop in National CineMedia's long position.| Shake Shack vs. Noble Romans | Shake Shack vs. Good Times Restaurants | Shake Shack vs. Flanigans Enterprises | Shake Shack vs. FAT Brands |
| National CineMedia vs. MGO Global Common | National CineMedia vs. Baosheng Media Group | National CineMedia vs. Glory Star New | National CineMedia vs. Impact Fusion 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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