Correlation Between Shake Shack and Paysafe
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Paysafe 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 Paysafe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Paysafe, you can compare the effects of market volatilities on Shake Shack and Paysafe 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 Paysafe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Paysafe.
Diversification Opportunities for Shake Shack and Paysafe
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shake and Paysafe is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Paysafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe 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 Paysafe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysafe has no effect on the direction of Shake Shack i.e., Shake Shack and Paysafe go up and down completely randomly.
Pair Corralation between Shake Shack and Paysafe
Given the investment horizon of 90 days Shake Shack is expected to under-perform the Paysafe. But the stock apears to be less risky and, when comparing its historical volatility, Shake Shack is 1.23 times less risky than Paysafe. The stock trades about 0.0 of its potential returns per unit of risk. The Paysafe is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,876 in Paysafe on November 27, 2024 and sell it today you would earn a total of 5.00 from holding Paysafe or generate 0.27% 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. Paysafe
Performance |
| Timeline |
| Shake Shack |
| Paysafe |
Shake Shack and Paysafe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Paysafe
The main advantage of trading using opposite Shake Shack and Paysafe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Paysafe 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 Paysafe will offset losses from the drop in Paysafe'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 |
| Paysafe vs. Skillz Platform | Paysafe vs. SoFi Technologies | Paysafe vs. Clover Health Investments | Paysafe vs. Opendoor Technologies |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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