Correlation Between United Homes and Shake Shack
Can any of the company-specific risk be diversified away by investing in both United Homes and Shake Shack 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 United Homes and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Homes Group and Shake Shack, you can compare the effects of market volatilities on United Homes and Shake Shack 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 United Homes with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Homes and Shake Shack.
Diversification Opportunities for United Homes and Shake Shack
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Shake is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding United Homes Group and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and United Homes 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 United Homes Group are associated (or correlated) with Shake Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shake Shack has no effect on the direction of United Homes i.e., United Homes and Shake Shack go up and down completely randomly.
Pair Corralation between United Homes and Shake Shack
Considering the 90-day investment horizon United Homes Group is expected to under-perform the Shake Shack. In addition to that, United Homes is 1.57 times more volatile than Shake Shack. It trades about -0.06 of its total potential returns per unit of risk. Shake Shack is currently generating about 0.11 per unit of volatility. If you would invest 9,354 in Shake Shack on September 14, 2024 and sell it today you would earn a total of 3,805 from holding Shake Shack or generate 40.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
United Homes Group vs. Shake Shack
Performance |
Timeline |
United Homes Group |
Shake Shack |
United Homes and Shake Shack Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Homes and Shake Shack
The main advantage of trading using opposite United Homes and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Homes position performs unexpectedly, Shake Shack 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 Shake Shack will offset losses from the drop in Shake Shack's long position.United Homes vs. Lindblad Expeditions Holdings | United Homes vs. Cumulus Media Class | United Homes vs. Oasis Hotel Resort | United Homes vs. Playa Hotels Resorts |
Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
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.
Other Complementary Tools
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |