Correlation Between Shake Shack and United Parks
Can any of the company-specific risk be diversified away by investing in both Shake Shack and United Parks 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 United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and United Parks Resorts, you can compare the effects of market volatilities on Shake Shack and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and United Parks.
Diversification Opportunities for Shake Shack and United Parks
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shake and United is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Shake Shack i.e., Shake Shack and United Parks go up and down completely randomly.
Pair Corralation between Shake Shack and United Parks
Given the investment horizon of 90 days Shake Shack is expected to generate 1.23 times more return on investment than United Parks. However, Shake Shack is 1.23 times more volatile than United Parks Resorts. It trades about 0.25 of its potential returns per unit of risk. United Parks Resorts is currently generating about 0.12 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. United Parks Resorts
Performance |
| Timeline |
| Shake Shack |
| United Parks Resorts |
Shake Shack and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and United Parks
The main advantage of trading using opposite Shake Shack and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.| Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
| United Parks vs. Chipotle Mexican Grill | United Parks vs. Yum Brands | United Parks vs. The Wendys Co | United Parks 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |