Correlation Between Shake Shack and Xponential Fitness
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Xponential Fitness 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 Xponential Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Xponential Fitness, you can compare the effects of market volatilities on Shake Shack and Xponential Fitness 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 Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Xponential Fitness.
Diversification Opportunities for Shake Shack and Xponential Fitness
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shake and Xponential is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness 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 Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Shake Shack i.e., Shake Shack and Xponential Fitness go up and down completely randomly.
Pair Corralation between Shake Shack and Xponential Fitness
Given the investment horizon of 90 days Shake Shack is expected to generate 1.46 times less return on investment than Xponential Fitness. But when comparing it to its historical volatility, Shake Shack is 2.49 times less risky than Xponential Fitness. It trades about 0.25 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,259 in Xponential Fitness on August 30, 2024 and sell it today you would earn a total of 262.00 from holding Xponential Fitness or generate 20.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. Xponential Fitness
Performance |
| Timeline |
| Shake Shack |
| Xponential Fitness |
Shake Shack and Xponential Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Xponential Fitness
The main advantage of trading using opposite Shake Shack and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Xponential Fitness 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 Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.| Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
| Xponential Fitness vs. Chipotle Mexican Grill | Xponential Fitness vs. Yum Brands | Xponential Fitness vs. The Wendys Co | Xponential Fitness vs. McDonalds |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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