Correlation Between GENERAL and Shake Shack
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By analyzing existing cross correlation between GENERAL ELEC CAP and Shake Shack, you can compare the effects of market volatilities on GENERAL 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 GENERAL with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of GENERAL and Shake Shack.
Diversification Opportunities for GENERAL and Shake Shack
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GENERAL and Shake is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding GENERAL ELEC CAP and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and GENERAL 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 GENERAL ELEC CAP 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 GENERAL i.e., GENERAL and Shake Shack go up and down completely randomly.
Pair Corralation between GENERAL and Shake Shack
Assuming the 90 days trading horizon GENERAL ELEC CAP is expected to under-perform the Shake Shack. But the bond apears to be less risky and, when comparing its historical volatility, GENERAL ELEC CAP is 2.51 times less risky than Shake Shack. The bond trades about -0.02 of its potential returns per unit of risk. The Shake Shack is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 10,180 in Shake Shack on September 12, 2024 and sell it today you would earn a total of 3,628 from holding Shake Shack or generate 35.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 35.94% |
| Values | Daily Returns |
GENERAL ELEC CAP vs. Shake Shack
Performance |
| Timeline |
| GENERAL ELEC CAP |
| Shake Shack |
GENERAL and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GENERAL and Shake Shack
The main advantage of trading using opposite GENERAL and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GENERAL 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 GENERAL ELEC CAP 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.| Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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