Correlation Between Shake Shack and Pampa Energa
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Pampa Energa 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 Pampa Energa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Pampa Energa SA, you can compare the effects of market volatilities on Shake Shack and Pampa Energa 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 Pampa Energa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Pampa Energa.
Diversification Opportunities for Shake Shack and Pampa Energa
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shake and Pampa is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Pampa Energa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energa SA 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 Pampa Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energa SA has no effect on the direction of Shake Shack i.e., Shake Shack and Pampa Energa go up and down completely randomly.
Pair Corralation between Shake Shack and Pampa Energa
Given the investment horizon of 90 days Shake Shack is expected to generate 1.39 times less return on investment than Pampa Energa. But when comparing it to its historical volatility, Shake Shack is 1.44 times less risky than Pampa Energa. It trades about 0.09 of its potential returns per unit of risk. Pampa Energa SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 105.00 in Pampa Energa SA on September 14, 2024 and sell it today you would earn a total of 127.00 from holding Pampa Energa SA or generate 120.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Shake Shack vs. Pampa Energa SA
Performance |
| Timeline |
| Shake Shack |
| Pampa Energa SA |
Shake Shack and Pampa Energa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Pampa Energa
The main advantage of trading using opposite Shake Shack and Pampa Energa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Pampa Energa 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 Pampa Energa will offset losses from the drop in Pampa Energa's long position.The idea behind Shake Shack and Pampa Energa SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pampa Energa vs. Shake Shack | Pampa Energa vs. The Wendys Co | Pampa Energa vs. Boyd Gaming | Pampa Energa vs. Kura Sushi USA |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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