Correlation Between Shake Shack and 694308KB2

Can any of the company-specific risk be diversified away by investing in both Shake Shack and 694308KB2 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 694308KB2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shake Shack and PCG 42 01 MAR 29, you can compare the effects of market volatilities on Shake Shack and 694308KB2 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 694308KB2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and 694308KB2.

Diversification Opportunities for Shake Shack and 694308KB2

0.19

Correlation Coefficient

Shake Shack  694308KB2

Average diversification

The 3 months correlation between Shake and 694308KB2 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and PCG 42 01 MAR 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCG 42 01 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 694308KB2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCG 42 01 has no effect on the direction of Shake Shack i.e., Shake Shack and 694308KB2 go up and down completely randomly.

Pair Corralation between Shake Shack and 694308KB2

Given the investment horizon of 90 days Shake Shack is expected to under-perform the 694308KB2. In addition to that, Shake Shack is 2.48 times more volatile than PCG 42 01 MAR 29. It trades about -0.14 of its total potential returns per unit of risk. PCG 42 01 MAR 29 is currently generating about -0.12 per unit of volatility. If you would invest  9,651  in PCG 42 01 MAR 29 on December 24, 2024 and sell it today you would lose (920.00) from holding PCG 42 01 MAR 29 or give up 9.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.16%
Values	Daily Returns

Shake Shack  vs.  PCG 42 01 MAR 29

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.

PCG 42 01

Risk-Adjusted Performance

Very Weak

Over the last 90 days PCG 42 01 MAR 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PCG 42 01 MAR 29 investors.

Pair Trading with Shake Shack and 694308KB2

The main advantage of trading using opposite Shake Shack and 694308KB2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, 694308KB2 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 694308KB2 will offset losses from the drop in 694308KB2's long position.

The idea behind Shake Shack and PCG 42 01 MAR 29 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.