Correlation Between Udemy and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Udemy and Shake Shack 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 Udemy and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Udemy Inc and Shake Shack, you can compare the effects of market volatilities on Udemy and Shake Shack 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 Udemy with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Udemy and Shake Shack.
Diversification Opportunities for Udemy and Shake Shack
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Udemy and Shake is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Udemy Inc and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Udemy 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 Udemy Inc are associated (or correlated) with Shake Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shake Shack has no effect on the direction of Udemy i.e., Udemy and Shake Shack go up and down completely randomly.
Pair Corralation between Udemy and Shake Shack
Given the investment horizon of 90 days Udemy Inc is expected to under-perform the Shake Shack. In addition to that, Udemy is 1.19 times more volatile than Shake Shack. It trades about -0.01 of its total potential returns per unit of risk. Shake Shack is currently generating about 0.08 per unit of volatility. 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 |
Udemy Inc vs. Shake Shack
Performance |
| Timeline |
| Udemy Inc |
| Shake Shack |
Udemy and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Udemy and Shake Shack
The main advantage of trading using opposite Udemy and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Udemy position performs unexpectedly, Shake Shack 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 Shake Shack will offset losses from the drop in Shake Shack's long position.| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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