Correlation Between Shake Shack and Minority Equality

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

By analyzing existing cross correlation between Shake Shack and Minority Equality Opportunities, you can compare the effects of market volatilities on Shake Shack and Minority Equality 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 Minority Equality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Minority Equality.

Diversification Opportunities for Shake Shack and Minority Equality

0.81

Correlation Coefficient

Shake Shack  Minority Equality

Very poor diversification

The 3 months correlation between Shake and Minority is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Minority Equality Opportunitie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minority Equality 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 Minority Equality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minority Equality has no effect on the direction of Shake Shack i.e., Shake Shack and Minority Equality go up and down completely randomly.

Pair Corralation between Shake Shack and Minority Equality

If you would invest  6,523  in Shake Shack on October 9, 2024 and sell it today you would earn a total of  6,680  from holding Shake Shack or generate 102.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	0.4%
Values	Daily Returns

Shake Shack  vs.  Minority Equality Opportunitie

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 weak basic indicators, Shake Shack disclosed solid returns over the last few months and may actually be approaching a breakup point.

Minority Equality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minority Equality Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Minority Equality is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Shake Shack and Minority Equality

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

The idea behind Shake Shack and Minority Equality Opportunities 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.