Correlation Between Shake Shack and ANZNZ

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

By analyzing existing cross correlation between Shake Shack and ANZNZ 2166 18 FEB 25, you can compare the effects of market volatilities on Shake Shack and ANZNZ 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 ANZNZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and ANZNZ.

Diversification Opportunities for Shake Shack and ANZNZ

0.68

Correlation Coefficient

Shake Shack  ANZNZ

Poor diversification

The 3 months correlation between Shake and ANZNZ is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and ANZNZ 2166 18 FEB 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANZNZ 2166 18 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 ANZNZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANZNZ 2166 18 has no effect on the direction of Shake Shack i.e., Shake Shack and ANZNZ go up and down completely randomly.

Pair Corralation between Shake Shack and ANZNZ

Given the investment horizon of 90 days Shake Shack is expected to generate 5.69 times more return on investment than ANZNZ. However, Shake Shack is 5.69 times more volatile than ANZNZ 2166 18 FEB 25. It trades about 0.11 of its potential returns per unit of risk. ANZNZ 2166 18 FEB 25 is currently generating about -0.03 per unit of risk. If you would invest  6,098  in Shake Shack on October 3, 2024 and sell it today you would earn a total of  6,853  from holding Shake Shack or generate 112.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	40.45%
Values	Daily Returns

Shake Shack  vs.  ANZNZ 2166 18 FEB 25

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.

ANZNZ 2166 18

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANZNZ 2166 18 FEB 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for ANZNZ 2166 18 FEB 25 investors.

Pair Trading with Shake Shack and ANZNZ

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

The idea behind Shake Shack and ANZNZ 2166 18 FEB 25 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.