Correlation Between Shake Shack and BROADCOM
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By analyzing existing cross correlation between Shake Shack and BROADCOM INC, you can compare the effects of market volatilities on Shake Shack and BROADCOM 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 BROADCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and BROADCOM.
Diversification Opportunities for Shake Shack and BROADCOM
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shake and BROADCOM is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and BROADCOM INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADCOM 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 BROADCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADCOM INC has no effect on the direction of Shake Shack i.e., Shake Shack and BROADCOM go up and down completely randomly.
Pair Corralation between Shake Shack and BROADCOM
Given the investment horizon of 90 days Shake Shack is expected to generate 8.12 times more return on investment than BROADCOM. However, Shake Shack is 8.12 times more volatile than BROADCOM INC. It trades about 0.23 of its potential returns per unit of risk. BROADCOM INC is currently generating about -0.08 per unit of risk. If you would invest 10,180 in Shake Shack on September 12, 2024 and sell it today you would earn a total of 3,628 from holding Shake Shack or generate 35.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.31% |
| Values | Daily Returns |
Shake Shack vs. BROADCOM INC
Performance |
| Timeline |
| Shake Shack |
| BROADCOM INC |
Shake Shack and BROADCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and BROADCOM
The main advantage of trading using opposite Shake Shack and BROADCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, BROADCOM 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 BROADCOM will offset losses from the drop in BROADCOM's long position.| Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
| BROADCOM vs. Chiba Bank Ltd | BROADCOM vs. BCB Bancorp | BROADCOM vs. PennantPark Floating Rate | BROADCOM vs. Siriuspoint |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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