Correlation Between Jack In and Shake Shack

Can any of the company-specific risk be diversified away by investing in both Jack In 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 Jack In and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jack In The and Shake Shack, you can compare the effects of market volatilities on Jack In 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 Jack In with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jack In and Shake Shack.

Diversification Opportunities for Jack In and Shake Shack

0.47

Correlation Coefficient

Jack In  Shake Shack

Very weak diversification

The 3 months correlation between Jack and Shake is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Jack In The and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Jack In 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 Jack In The 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 Jack In i.e., Jack In and Shake Shack go up and down completely randomly.

Pair Corralation between Jack In and Shake Shack

Given the investment horizon of 90 days Jack In The is expected to under-perform the Shake Shack. In addition to that, Jack In is 1.2 times more volatile than Shake Shack. It trades about -0.02 of its total potential returns per unit of risk. Shake Shack is currently generating about 0.21 per unit of volatility. If you would invest  9,941  in Shake Shack on August 30, 2024 and sell it today you would earn a total of  3,294  from holding Shake Shack or generate 33.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Jack In The  vs.  Shake Shack

Jack In

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jack In The has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Jack In is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Shake Shack

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shake Shack are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Shake Shack disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jack In and Shake Shack

The main advantage of trading using opposite Jack In and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jack In 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 Jack In The 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.