Correlation Between Shake Shack and BTQ Technologies

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

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

Diversification Opportunities for Shake Shack and BTQ Technologies

0.44

Correlation Coefficient

Shake Shack  BTQ Technologies

Very weak diversification

The 3 months correlation between Shake and BTQ is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and BTQ Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTQ Technologies Corp and Shake Shack 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 Shake Shack are associated (or correlated) with BTQ Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTQ Technologies Corp has no effect on the direction of Shake Shack i.e., Shake Shack and BTQ Technologies go up and down completely randomly.

Pair Corralation between Shake Shack and BTQ Technologies

Given the investment horizon of 90 days Shake Shack is expected to generate 3065.21 times less return on investment than BTQ Technologies. But when comparing it to its historical volatility, Shake Shack is 19.81 times less risky than BTQ Technologies. It trades about 0.0 of its potential returns per unit of risk. BTQ Technologies Corp is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  52.00  in BTQ Technologies Corp on October 8, 2024 and sell it today you would earn a total of  355.00  from holding BTQ Technologies Corp or generate 682.69% return on investment over 90 days.

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

Shake Shack  vs.  BTQ Technologies Corp

Shake Shack

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shake Shack are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Shake Shack disclosed solid returns over the last few months and may actually be approaching a breakup point.

BTQ Technologies Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BTQ Technologies Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BTQ Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shake Shack and BTQ Technologies

The main advantage of trading using opposite Shake Shack and BTQ Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, BTQ Technologies 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 BTQ Technologies will offset losses from the drop in BTQ Technologies' long position.

The idea behind Shake Shack and BTQ Technologies Corp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.