Correlation Between Shake Shack and Teleflex Incorporated
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Teleflex Incorporated 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 Teleflex Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Teleflex Incorporated, you can compare the effects of market volatilities on Shake Shack and Teleflex Incorporated 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 Teleflex Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Teleflex Incorporated.
Diversification Opportunities for Shake Shack and Teleflex Incorporated
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shake and Teleflex is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated 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 Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of Shake Shack i.e., Shake Shack and Teleflex Incorporated go up and down completely randomly.
Pair Corralation between Shake Shack and Teleflex Incorporated
Given the investment horizon of 90 days Shake Shack is expected to generate 1.61 times more return on investment than Teleflex Incorporated. However, Shake Shack is 1.61 times more volatile than Teleflex Incorporated. It trades about 0.11 of its potential returns per unit of risk. Teleflex Incorporated is currently generating about -0.03 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 Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Teleflex Incorporated
Performance |
| Timeline |
| Shake Shack |
| Teleflex Incorporated |
Shake Shack and Teleflex Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Teleflex Incorporated
The main advantage of trading using opposite Shake Shack and Teleflex Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Teleflex Incorporated 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 Teleflex Incorporated will offset losses from the drop in Teleflex Incorporated's long position.| Shake Shack vs. Hyatt Hotels | Shake Shack vs. Smart Share Global | Shake Shack vs. Sweetgreen | Shake Shack vs. Wyndham Hotels Resorts |
| Teleflex Incorporated vs. Baxter International | Teleflex Incorporated vs. West Pharmaceutical Services | Teleflex Incorporated vs. ResMed Inc | Teleflex Incorporated vs. The Cooper Companies, |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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