Correlation Between 456837AM5 and Shake Shack

Can any of the company-specific risk be diversified away by investing in both 456837AM5 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 456837AM5 and Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ING Groep NV and Shake Shack, you can compare the effects of market volatilities on 456837AM5 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 456837AM5 with a short position of Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of 456837AM5 and Shake Shack.

Diversification Opportunities for 456837AM5 and Shake Shack

-0.65

Correlation Coefficient

456837AM5  Shake Shack

Excellent diversification

The 3 months correlation between 456837AM5 and Shake is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding ING Groep NV and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and 456837AM5 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 ING Groep NV 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 456837AM5 i.e., 456837AM5 and Shake Shack go up and down completely randomly.

Pair Corralation between 456837AM5 and Shake Shack

Assuming the 90 days trading horizon ING Groep NV is expected to under-perform the Shake Shack. But the bond apears to be less risky and, when comparing its historical volatility, ING Groep NV is 2.53 times less risky than Shake Shack. The bond trades about -0.17 of its potential returns per unit of risk. The Shake Shack is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,748  in Shake Shack on September 19, 2024 and sell it today you would earn a total of  1,842  from holding Shake Shack or generate 17.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	89.06%
Values	Daily Returns

ING Groep NV  vs.  Shake Shack

ING Groep NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ING Groep NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 ING Groep NV investors.

Shake Shack

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shake Shack are ranked lower than 9 (%) 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 456837AM5 and Shake Shack

The main advantage of trading using opposite 456837AM5 and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 456837AM5 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 ING Groep NV 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.