Correlation Between Upstream Bio, and Shake Shack

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

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

Diversification Opportunities for Upstream Bio, and Shake Shack

0.13

Correlation Coefficient

Upstream Bio,  Shake Shack

Average diversification

The 3 months correlation between Upstream and Shake is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Upstream Bio, and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Upstream Bio, 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 Upstream Bio, 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 Upstream Bio, i.e., Upstream Bio, and Shake Shack go up and down completely randomly.

Pair Corralation between Upstream Bio, and Shake Shack

Considering the 90-day investment horizon Upstream Bio, is expected to under-perform the Shake Shack. In addition to that, Upstream Bio, is 3.46 times more volatile than Shake Shack. It trades about -0.14 of its total potential returns per unit of risk. Shake Shack is currently generating about -0.04 per unit of volatility. If you would invest  13,234  in Shake Shack on October 4, 2024 and sell it today you would lose (254.00) from holding Shake Shack or give up 1.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Upstream Bio,  vs.  Shake Shack

Upstream Bio,

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Upstream Bio, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Upstream Bio, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shake Shack

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shake Shack are ranked lower than 10 (%) 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.

Pair Trading with Upstream Bio, and Shake Shack

The main advantage of trading using opposite Upstream Bio, and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Upstream Bio, 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.

The idea behind Upstream Bio, and Shake Shack 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.