Correlation Between Shake Shack and Summit Midstream
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Summit Midstream 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 Summit Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Summit Midstream, you can compare the effects of market volatilities on Shake Shack and Summit Midstream 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 Summit Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Summit Midstream.
Diversification Opportunities for Shake Shack and Summit Midstream
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shake and Summit is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream 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 Summit Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Midstream has no effect on the direction of Shake Shack i.e., Shake Shack and Summit Midstream go up and down completely randomly.
Pair Corralation between Shake Shack and Summit Midstream
Given the investment horizon of 90 days Shake Shack is expected to generate 0.92 times more return on investment than Summit Midstream. However, Shake Shack is 1.08 times less risky than Summit Midstream. It trades about 0.23 of its potential returns per unit of risk. Summit Midstream is currently generating about 0.02 per unit of risk. If you would invest 9,776 in Shake Shack on August 31, 2024 and sell it today you would earn a total of 3,459 from holding Shake Shack or generate 35.38% 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. Summit Midstream
Performance |
| Timeline |
| Shake Shack |
| Summit Midstream |
Shake Shack and Summit Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Summit Midstream
The main advantage of trading using opposite Shake Shack and Summit Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Summit Midstream 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 Summit Midstream will offset losses from the drop in Summit Midstream's long position.| Shake Shack vs. Wingstop | Shake Shack vs. The Wendys Co | Shake Shack vs. RLJ Lodging Trust | Shake Shack vs. Aquagold International |
| Summit Midstream vs. Atlantica Sustainable Infrastructure | Summit Midstream vs. Clearway Energy | Summit Midstream vs. Brookfield Renewable Corp | Summit Midstream vs. Nextera Energy Partners |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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