Correlation Between Shake Shack and Stagwell
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Stagwell 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 Stagwell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Stagwell, you can compare the effects of market volatilities on Shake Shack and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Stagwell.
Diversification Opportunities for Shake Shack and Stagwell
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shake and Stagwell is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Shake Shack i.e., Shake Shack and Stagwell go up and down completely randomly.
Pair Corralation between Shake Shack and Stagwell
Given the investment horizon of 90 days Shake Shack is expected to generate 0.78 times more return on investment than Stagwell. However, Shake Shack is 1.28 times less risky than Stagwell. It trades about 0.07 of its potential returns per unit of risk. Stagwell is currently generating about 0.01 per unit of risk. If you would invest 5,667 in Shake Shack on November 7, 2024 and sell it today you would earn a total of 6,258 from holding Shake Shack or generate 110.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Stagwell
Performance |
| Timeline |
| Shake Shack |
| Stagwell |
Shake Shack and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Stagwell
The main advantage of trading using opposite Shake Shack and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell'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 |
| Stagwell vs. Innovid Corp | Stagwell vs. Interpublic Group of | Stagwell vs. Cimpress NV | Stagwell vs. Criteo Sa |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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