Correlation Between Shake Shack and Pinstripes Holdings
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Pinstripes Holdings 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 Pinstripes Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Pinstripes Holdings, you can compare the effects of market volatilities on Shake Shack and Pinstripes Holdings 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 Pinstripes Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Pinstripes Holdings.
Diversification Opportunities for Shake Shack and Pinstripes Holdings
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shake and Pinstripes is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Pinstripes Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinstripes Holdings 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 Pinstripes Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinstripes Holdings has no effect on the direction of Shake Shack i.e., Shake Shack and Pinstripes Holdings go up and down completely randomly.
Pair Corralation between Shake Shack and Pinstripes Holdings
Given the investment horizon of 90 days Shake Shack is expected to generate 0.38 times more return on investment than Pinstripes Holdings. However, Shake Shack is 2.65 times less risky than Pinstripes Holdings. It trades about 0.25 of its potential returns per unit of risk. Pinstripes Holdings is currently generating about 0.01 per unit of risk. If you would invest 11,362 in Shake Shack on August 30, 2024 and sell it today you would earn a total of 1,873 from holding Shake Shack or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Pinstripes Holdings
Performance |
| Timeline |
| Shake Shack |
| Pinstripes Holdings |
Shake Shack and Pinstripes Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Pinstripes Holdings
The main advantage of trading using opposite Shake Shack and Pinstripes Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Pinstripes Holdings 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 Pinstripes Holdings will offset losses from the drop in Pinstripes Holdings' long position.| Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
| Pinstripes Holdings vs. Chipotle Mexican Grill | Pinstripes Holdings vs. Yum Brands | Pinstripes Holdings vs. The Wendys Co | Pinstripes Holdings vs. McDonalds |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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