Correlation Between Loop Media and Shake Shack

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

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

Diversification Opportunities for Loop Media and Shake Shack

0.0

Correlation Coefficient

Loop Media  Shake Shack

Pay attention - limited upside

The 3 months correlation between Loop and Shake is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Loop Media and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Loop Media 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 Loop Media 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 Loop Media i.e., Loop Media and Shake Shack go up and down completely randomly.

Pair Corralation between Loop Media and Shake Shack

If you would invest  5,547  in Shake Shack on December 4, 2024 and sell it today you would earn a total of  4,555  from holding Shake Shack or generate 82.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Loop Media  vs.  Shake Shack

Loop Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loop Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Loop Media is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Shake Shack

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shake Shack has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Loop Media and Shake Shack

The main advantage of trading using opposite Loop Media and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loop Media 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 Loop Media 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.