Correlation Between Where Food and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Where Food 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 Where Food and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Where Food Comes and Shake Shack, you can compare the effects of market volatilities on Where Food 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 Where Food with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Where Food and Shake Shack.
Diversification Opportunities for Where Food and Shake Shack
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Where and Shake is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Where Food Comes and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Where Food 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 Where Food Comes 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 Where Food i.e., Where Food and Shake Shack go up and down completely randomly.
Pair Corralation between Where Food and Shake Shack
Given the investment horizon of 90 days Where Food Comes is expected to under-perform the Shake Shack. But the stock apears to be less risky and, when comparing its historical volatility, Where Food Comes is 1.27 times less risky than Shake Shack. The stock trades about 0.0 of its potential returns per unit of risk. The Shake Shack is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,718 in Shake Shack on August 30, 2024 and sell it today you would earn a total of 8,517 from holding Shake Shack or generate 180.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Where Food Comes vs. Shake Shack
Performance |
| Timeline |
| Where Food Comes |
| Shake Shack |
Where Food and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Where Food and Shake Shack
The main advantage of trading using opposite Where Food and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Where Food 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.| Where Food vs. Marin Software | Where Food vs. EzFill Holdings | Where Food vs. Trust Stamp | Where Food vs. Infobird Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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