Correlation Between 11135FBR1 and Shake Shack

Can any of the company-specific risk be diversified away by investing in both 11135FBR1 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 11135FBR1 and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AVGO 4 15 APR 29 and Shake Shack, you can compare the effects of market volatilities on 11135FBR1 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 11135FBR1 with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of 11135FBR1 and Shake Shack.

Diversification Opportunities for 11135FBR1 and Shake Shack

0.19

Correlation Coefficient

11135FBR1  Shake Shack

Average diversification

The 3 months correlation between 11135FBR1 and Shake is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding AVGO 4 15 APR 29 and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and 11135FBR1 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 AVGO 4 15 APR 29 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 11135FBR1 i.e., 11135FBR1 and Shake Shack go up and down completely randomly.

Pair Corralation between 11135FBR1 and Shake Shack

Assuming the 90 days trading horizon AVGO 4 15 APR 29 is expected to generate 0.22 times more return on investment than Shake Shack. However, AVGO 4 15 APR 29 is 4.62 times less risky than Shake Shack. It trades about -0.11 of its potential returns per unit of risk. Shake Shack is currently generating about -0.15 per unit of risk. If you would invest  9,694  in AVGO 4 15 APR 29 on December 5, 2024 and sell it today you would lose (469.00) from holding AVGO 4 15 APR 29 or give up 4.84% of portfolio value over 90 days.

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

AVGO 4 15 APR 29  vs.  Shake Shack

AVGO 4 15

Risk-Adjusted Performance

Very Weak

Over the last 90 days AVGO 4 15 APR 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 11135FBR1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with 11135FBR1 and Shake Shack

The main advantage of trading using opposite 11135FBR1 and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 11135FBR1 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 AVGO 4 15 APR 29 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.