Correlation Between Shake Shack and Uber Technologies
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Uber Technologies 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 Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Uber Technologies, you can compare the effects of market volatilities on Shake Shack and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Uber Technologies.
Diversification Opportunities for Shake Shack and Uber Technologies
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shake and Uber is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Shake Shack i.e., Shake Shack and Uber Technologies go up and down completely randomly.
Pair Corralation between Shake Shack and Uber Technologies
Given the investment horizon of 90 days Shake Shack is expected to generate 1.01 times more return on investment than Uber Technologies. However, Shake Shack is 1.01 times more volatile than Uber Technologies. It trades about 0.12 of its potential returns per unit of risk. Uber Technologies is currently generating about -0.02 per unit of risk. If you would invest 8,901 in Shake Shack on September 19, 2024 and sell it today you would earn a total of 4,262 from holding Shake Shack or generate 47.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Uber Technologies
Performance |
| Timeline |
| Shake Shack |
| Uber Technologies |
Shake Shack and Uber Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Uber Technologies
The main advantage of trading using opposite Shake Shack and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.| Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
| Uber Technologies vs. Zoom Video Communications | Uber Technologies vs. Snowflake | Uber Technologies vs. Workday | Uber Technologies vs. C3 Ai 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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