Correlation Between EDPPL and Shake Shack
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By analyzing existing cross correlation between EDPPL 171 24 JAN 28 and Shake Shack, you can compare the effects of market volatilities on EDPPL 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 EDPPL with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDPPL and Shake Shack.
Diversification Opportunities for EDPPL and Shake Shack
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EDPPL and Shake is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding EDPPL 171 24 JAN 28 and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and EDPPL 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 EDPPL 171 24 JAN 28 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 EDPPL i.e., EDPPL and Shake Shack go up and down completely randomly.
Pair Corralation between EDPPL and Shake Shack
Assuming the 90 days trading horizon EDPPL is expected to generate 22.03 times less return on investment than Shake Shack. But when comparing it to its historical volatility, EDPPL 171 24 JAN 28 is 4.56 times less risky than Shake Shack. It trades about 0.02 of its potential returns per unit of risk. Shake Shack is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,338 in Shake Shack on September 14, 2024 and sell it today you would earn a total of 8,804 from holding Shake Shack or generate 202.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 61.41% |
| Values | Daily Returns |
EDPPL 171 24 JAN 28 vs. Shake Shack
Performance |
| Timeline |
| EDPPL 171 24 |
| Shake Shack |
EDPPL and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EDPPL and Shake Shack
The main advantage of trading using opposite EDPPL and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDPPL 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.The idea behind EDPPL 171 24 JAN 28 and Shake Shack pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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