Correlation Between Blue Moon and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Blue Moon 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 Blue Moon and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Moon Metals and Shake Shack, you can compare the effects of market volatilities on Blue Moon 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 Blue Moon with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Moon and Shake Shack.
Diversification Opportunities for Blue Moon and Shake Shack
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Blue and Shake is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Metals and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Blue Moon 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 Blue Moon Metals 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 Blue Moon i.e., Blue Moon and Shake Shack go up and down completely randomly.
Pair Corralation between Blue Moon and Shake Shack
Assuming the 90 days horizon Blue Moon Metals is expected to generate 6.36 times more return on investment than Shake Shack. However, Blue Moon is 6.36 times more volatile than Shake Shack. It trades about 0.13 of its potential returns per unit of risk. Shake Shack is currently generating about 0.06 per unit of risk. If you would invest 2.97 in Blue Moon Metals on September 24, 2024 and sell it today you would earn a total of 22.03 from holding Blue Moon Metals or generate 741.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Blue Moon Metals vs. Shake Shack
Performance |
Timeline |
Blue Moon Metals |
Shake Shack |
Blue Moon and Shake Shack Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Blue Moon and Shake Shack
The main advantage of trading using opposite Blue Moon and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Moon 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.Blue Moon vs. Canada Carbon | Blue Moon vs. Premium Nickel Resources | Blue Moon vs. Clime Investment Management | Blue Moon vs. CopAur Minerals |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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