Correlation Between Shake Shack and Nextnav Acquisition
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Nextnav Acquisition 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 Nextnav Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Nextnav Acquisition Corp, you can compare the effects of market volatilities on Shake Shack and Nextnav Acquisition 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 Nextnav Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Nextnav Acquisition.
Diversification Opportunities for Shake Shack and Nextnav Acquisition
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shake and Nextnav is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Nextnav Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextnav Acquisition Corp 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 Nextnav Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextnav Acquisition Corp has no effect on the direction of Shake Shack i.e., Shake Shack and Nextnav Acquisition go up and down completely randomly.
Pair Corralation between Shake Shack and Nextnav Acquisition
Given the investment horizon of 90 days Shake Shack is expected to generate 3.45 times less return on investment than Nextnav Acquisition. But when comparing it to its historical volatility, Shake Shack is 1.71 times less risky than Nextnav Acquisition. It trades about 0.15 of its potential returns per unit of risk. Nextnav Acquisition Corp is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,287 in Nextnav Acquisition Corp on September 5, 2024 and sell it today you would earn a total of 347.00 from holding Nextnav Acquisition Corp or generate 26.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Nextnav Acquisition Corp
Performance |
| Timeline |
| Shake Shack |
| Nextnav Acquisition Corp |
Shake Shack and Nextnav Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Nextnav Acquisition
The main advantage of trading using opposite Shake Shack and Nextnav Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Nextnav Acquisition 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 Nextnav Acquisition will offset losses from the drop in Nextnav Acquisition's long position.| Shake Shack vs. Hyatt Hotels | Shake Shack vs. Smart Share Global | Shake Shack vs. Wyndham Hotels Resorts | Shake Shack vs. WW International |
| Nextnav Acquisition vs. NetScout Systems | Nextnav Acquisition vs. Priority Technology Holdings | Nextnav Acquisition vs. OneSpan | Nextnav Acquisition vs. Consensus Cloud Solutions |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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