Correlation Between Shake Shack and Qualys
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Qualys 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 Qualys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Qualys Inc, you can compare the effects of market volatilities on Shake Shack and Qualys 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 Qualys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Qualys.
Diversification Opportunities for Shake Shack and Qualys
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shake and Qualys is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Qualys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualys Inc 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 Qualys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualys Inc has no effect on the direction of Shake Shack i.e., Shake Shack and Qualys go up and down completely randomly.
Pair Corralation between Shake Shack and Qualys
Given the investment horizon of 90 days Shake Shack is expected to generate 1.36 times more return on investment than Qualys. However, Shake Shack is 1.36 times more volatile than Qualys Inc. It trades about 0.24 of its potential returns per unit of risk. Qualys Inc is currently generating about 0.05 per unit of risk. If you would invest 11,649 in Shake Shack on September 19, 2024 and sell it today you would earn a total of 1,270 from holding Shake Shack or generate 10.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Qualys Inc
Performance |
| Timeline |
| Shake Shack |
| Qualys Inc |
Shake Shack and Qualys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Qualys
The main advantage of trading using opposite Shake Shack and Qualys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Qualys 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 Qualys will offset losses from the drop in Qualys' long position.| Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
| Qualys vs. Rapid7 Inc | Qualys vs. CyberArk Software | Qualys vs. Varonis Systems | Qualys vs. Check Point Software |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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