Correlation Between Shake Shack and Valuence Merger
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Valuence Merger 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 Valuence Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Valuence Merger Corp, you can compare the effects of market volatilities on Shake Shack and Valuence Merger 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 Valuence Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Valuence Merger.
Diversification Opportunities for Shake Shack and Valuence Merger
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shake and Valuence is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Valuence Merger Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valuence Merger Corp 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 Valuence Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valuence Merger Corp has no effect on the direction of Shake Shack i.e., Shake Shack and Valuence Merger go up and down completely randomly.
Pair Corralation between Shake Shack and Valuence Merger
Given the investment horizon of 90 days Shake Shack is expected to generate 5.19 times more return on investment than Valuence Merger. However, Shake Shack is 5.19 times more volatile than Valuence Merger Corp. It trades about 0.26 of its potential returns per unit of risk. Valuence Merger Corp is currently generating about -0.21 per unit of risk. If you would invest 11,362 in Shake Shack on August 30, 2024 and sell it today you would earn a total of 1,873 from holding Shake Shack or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Valuence Merger Corp
Performance |
| Timeline |
| Shake Shack |
| Valuence Merger Corp |
Shake Shack and Valuence Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Valuence Merger
The main advantage of trading using opposite Shake Shack and Valuence Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Valuence Merger 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 Valuence Merger will offset losses from the drop in Valuence Merger'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 |
| Valuence Merger vs. Sapiens International | Valuence Merger vs. Grupo Televisa SAB | Valuence Merger vs. Rackspace Technology | Valuence Merger vs. Qualys 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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