Correlation Between Shake Shack and Dave Busters
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Dave Busters 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 Dave Busters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Dave Busters Entertainment, you can compare the effects of market volatilities on Shake Shack and Dave Busters 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 Dave Busters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Dave Busters.
Diversification Opportunities for Shake Shack and Dave Busters
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shake and Dave is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta 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 Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of Shake Shack i.e., Shake Shack and Dave Busters go up and down completely randomly.
Pair Corralation between Shake Shack and Dave Busters
Given the investment horizon of 90 days Shake Shack is expected to under-perform the Dave Busters. But the stock apears to be less risky and, when comparing its historical volatility, Shake Shack is 1.97 times less risky than Dave Busters. The stock trades about -0.33 of its potential returns per unit of risk. The Dave Busters Entertainment is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 2,870 in Dave Busters Entertainment on October 23, 2024 and sell it today you would lose (220.00) from holding Dave Busters Entertainment or give up 7.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Shake Shack vs. Dave Busters Entertainment
Performance |
| Timeline |
| Shake Shack |
| Dave Busters Enterta |
Shake Shack and Dave Busters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Dave Busters
The main advantage of trading using opposite Shake Shack and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Dave Busters 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 Dave Busters will offset losses from the drop in Dave Busters' 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 |
| Dave Busters vs. Imax Corp | Dave Busters vs. Marcus | Dave Busters vs. AMC Networks | Dave Busters vs. Cinemark Holdings |
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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