Correlation Between Shake Shack and 40434LAF2

Can any of the company-specific risk be diversified away by investing in both Shake Shack and 40434LAF2 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 40434LAF2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shake Shack and HPQ 145 17 JUN 26, you can compare the effects of market volatilities on Shake Shack and 40434LAF2 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 40434LAF2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and 40434LAF2.

Diversification Opportunities for Shake Shack and 40434LAF2

-0.05

Correlation Coefficient

Shake Shack  40434LAF2

Good diversification

The 3 months correlation between Shake and 40434LAF2 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and HPQ 145 17 JUN 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HPQ 145 17 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 40434LAF2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HPQ 145 17 has no effect on the direction of Shake Shack i.e., Shake Shack and 40434LAF2 go up and down completely randomly.

Pair Corralation between Shake Shack and 40434LAF2

Given the investment horizon of 90 days Shake Shack is expected to under-perform the 40434LAF2. In addition to that, Shake Shack is 3.95 times more volatile than HPQ 145 17 JUN 26. It trades about -0.09 of its total potential returns per unit of risk. HPQ 145 17 JUN 26 is currently generating about -0.12 per unit of volatility. If you would invest  9,530  in HPQ 145 17 JUN 26 on December 3, 2024 and sell it today you would lose (564.00) from holding HPQ 145 17 JUN 26 or give up 5.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Shake Shack  vs.  HPQ 145 17 JUN 26

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.

HPQ 145 17

Risk-Adjusted Performance

Very Weak

Over the last 90 days HPQ 145 17 JUN 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 40434LAF2 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shake Shack and 40434LAF2

The main advantage of trading using opposite Shake Shack and 40434LAF2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, 40434LAF2 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 40434LAF2 will offset losses from the drop in 40434LAF2's long position.

The idea behind Shake Shack and HPQ 145 17 JUN 26 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.