Correlation Between Shake Shack and Udemy
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Udemy 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 Udemy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Udemy Inc, you can compare the effects of market volatilities on Shake Shack and Udemy 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 Udemy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Udemy.
Diversification Opportunities for Shake Shack and Udemy
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shake and Udemy is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Udemy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Udemy Inc 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 Udemy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Udemy Inc has no effect on the direction of Shake Shack i.e., Shake Shack and Udemy go up and down completely randomly.
Pair Corralation between Shake Shack and Udemy
Given the investment horizon of 90 days Shake Shack is expected to generate 0.84 times more return on investment than Udemy. However, Shake Shack is 1.19 times less risky than Udemy. It trades about 0.08 of its potential returns per unit of risk. Udemy Inc is currently generating about -0.01 per unit of risk. If you would invest 6,875 in Shake Shack on September 2, 2024 and sell it today you would earn a total of 6,498 from holding Shake Shack or generate 94.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Udemy Inc
Performance |
| Timeline |
| Shake Shack |
| Udemy Inc |
Shake Shack and Udemy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Udemy
The main advantage of trading using opposite Shake Shack and Udemy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Udemy 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 Udemy will offset losses from the drop in Udemy's long position.The idea behind Shake Shack and Udemy Inc 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.| Udemy vs. American Public Education | Udemy vs. ATA Creativity Global | Udemy vs. Cogna Educacao SA | Udemy vs. Adtalem Global Education |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |