Correlation Between Shake Shack and Stingray
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Stingray 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 Stingray into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Stingray Group, you can compare the effects of market volatilities on Shake Shack and Stingray 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 Stingray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Stingray.
Diversification Opportunities for Shake Shack and Stingray
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shake and Stingray is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Stingray Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stingray Group 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 Stingray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stingray Group has no effect on the direction of Shake Shack i.e., Shake Shack and Stingray go up and down completely randomly.
Pair Corralation between Shake Shack and Stingray
Given the investment horizon of 90 days Shake Shack is expected to generate 1.65 times less return on investment than Stingray. In addition to that, Shake Shack is 1.03 times more volatile than Stingray Group. It trades about 0.16 of its total potential returns per unit of risk. Stingray Group is currently generating about 0.27 per unit of volatility. If you would invest 498.00 in Stingray Group on September 2, 2024 and sell it today you would earn a total of 71.00 from holding Stingray Group or generate 14.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Shake Shack vs. Stingray Group
Performance |
| Timeline |
| Shake Shack |
| Stingray Group |
Shake Shack and Stingray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Stingray
The main advantage of trading using opposite Shake Shack and Stingray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Stingray 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 Stingray will offset losses from the drop in Stingray's long position.The idea behind Shake Shack and Stingray Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Stingray vs. Summit Materials | Stingray vs. Silo Pharma | Stingray vs. Tandy Leather Factory | Stingray vs. Harmony Gold Mining |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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