Correlation Between Shake Shack and VHAI
Can any of the company-specific risk be diversified away by investing in both Shake Shack and VHAI 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 VHAI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and VHAI, you can compare the effects of market volatilities on Shake Shack and VHAI 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 VHAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and VHAI.
Diversification Opportunities for Shake Shack and VHAI
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shake and VHAI is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and VHAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VHAI 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 VHAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VHAI has no effect on the direction of Shake Shack i.e., Shake Shack and VHAI go up and down completely randomly.
Pair Corralation between Shake Shack and VHAI
If you would invest 10,575 in Shake Shack on August 26, 2024 and sell it today you would earn a total of 1,726 from holding Shake Shack or generate 16.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 2.27% |
| Values | Daily Returns |
Shake Shack vs. VHAI
Performance |
| Timeline |
| Shake Shack |
| VHAI |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shake Shack and VHAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and VHAI
The main advantage of trading using opposite Shake Shack and VHAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, VHAI 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 VHAI will offset losses from the drop in VHAI'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 |
| VHAI vs. Lincoln Educational Services | VHAI vs. Cracker Barrel Old | VHAI vs. Shake Shack | VHAI vs. Westrock Coffee |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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