Correlation Between Shake Shack and Schibsted ASA
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Schibsted ASA 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 Schibsted ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Schibsted ASA ADR, you can compare the effects of market volatilities on Shake Shack and Schibsted ASA 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 Schibsted ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Schibsted ASA.
Diversification Opportunities for Shake Shack and Schibsted ASA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shake and Schibsted is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Schibsted ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schibsted ASA ADR 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 Schibsted ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schibsted ASA ADR has no effect on the direction of Shake Shack i.e., Shake Shack and Schibsted ASA go up and down completely randomly.
Pair Corralation between Shake Shack and Schibsted ASA
Given the investment horizon of 90 days Shake Shack is expected to generate 0.81 times more return on investment than Schibsted ASA. However, Shake Shack is 1.23 times less risky than Schibsted ASA. It trades about 0.11 of its potential returns per unit of risk. Schibsted ASA ADR is currently generating about 0.08 per unit of risk. If you would invest 6,683 in Shake Shack on September 4, 2024 and sell it today you would earn a total of 6,551 from holding Shake Shack or generate 98.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Shake Shack vs. Schibsted ASA ADR
Performance |
| Timeline |
| Shake Shack |
| Schibsted ASA ADR |
Shake Shack and Schibsted ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Schibsted ASA
The main advantage of trading using opposite Shake Shack and Schibsted ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Schibsted ASA 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 Schibsted ASA will offset losses from the drop in Schibsted ASA's long position.| Shake Shack vs. Hyatt Hotels | Shake Shack vs. Smart Share Global | Shake Shack vs. Sweetgreen | Shake Shack vs. Wyndham Hotels Resorts |
| Schibsted ASA vs. Westrock Coffee | Schibsted ASA vs. PepsiCo | Schibsted ASA vs. Vita Coco | Schibsted ASA vs. Usio Inc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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