Correlation Between Shake Shack and Saia

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

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

Diversification Opportunities for Shake Shack and Saia

0.56

Correlation Coefficient

Shake Shack  Saia

Very weak diversification

The 3 months correlation between Shake and Saia is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Saia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saia Inc 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 Saia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saia Inc has no effect on the direction of Shake Shack i.e., Shake Shack and Saia go up and down completely randomly.

Pair Corralation between Shake Shack and Saia

Given the investment horizon of 90 days Shake Shack is expected to generate 1.33 times more return on investment than Saia. However, Shake Shack is 1.33 times more volatile than Saia Inc. It trades about -0.11 of its potential returns per unit of risk. Saia Inc is currently generating about -0.22 per unit of risk. If you would invest  11,517  in Shake Shack on December 5, 2024 and sell it today you would lose (1,486) from holding Shake Shack or give up 12.9% of portfolio value over 90 days.

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

Shake Shack  vs.  Saia Inc

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.

Saia Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shake Shack and Saia

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

The idea behind Shake Shack and Saia Inc 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.