Correlation Between Shake Shack and Proficient Auto
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Proficient Auto 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 Proficient Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Proficient Auto Logistics,, you can compare the effects of market volatilities on Shake Shack and Proficient Auto 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 Proficient Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Proficient Auto.
Diversification Opportunities for Shake Shack and Proficient Auto
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shake and Proficient is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Proficient Auto Logistics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proficient Auto Logi 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 Proficient Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proficient Auto Logi has no effect on the direction of Shake Shack i.e., Shake Shack and Proficient Auto go up and down completely randomly.
Pair Corralation between Shake Shack and Proficient Auto
Given the investment horizon of 90 days Shake Shack is expected to under-perform the Proficient Auto. But the stock apears to be less risky and, when comparing its historical volatility, Shake Shack is 1.58 times less risky than Proficient Auto. The stock trades about -0.33 of its potential returns per unit of risk. The Proficient Auto Logistics, is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 768.00 in Proficient Auto Logistics, on October 23, 2024 and sell it today you would earn a total of 254.00 from holding Proficient Auto Logistics, or generate 33.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Proficient Auto Logistics,
Performance |
| Timeline |
| Shake Shack |
| Proficient Auto Logi |
Shake Shack and Proficient Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Proficient Auto
The main advantage of trading using opposite Shake Shack and Proficient Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Proficient Auto 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 Proficient Auto will offset losses from the drop in Proficient Auto'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 |
| Proficient Auto vs. Griffon | Proficient Auto vs. First Ship Lease | Proficient Auto vs. Stepan Company | Proficient Auto vs. Alta Equipment Group |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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