Correlation Between Shake Shack and Enersys
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Enersys 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 Enersys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Enersys, you can compare the effects of market volatilities on Shake Shack and Enersys 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 Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Enersys.
Diversification Opportunities for Shake Shack and Enersys
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shake and Enersys is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Shake Shack i.e., Shake Shack and Enersys go up and down completely randomly.
Pair Corralation between Shake Shack and Enersys
Given the investment horizon of 90 days Shake Shack is expected to generate 1.81 times more return on investment than Enersys. However, Shake Shack is 1.81 times more volatile than Enersys. It trades about -0.06 of its potential returns per unit of risk. Enersys is currently generating about -0.12 per unit of risk. If you would invest 10,238 in Shake Shack on January 26, 2024 and sell it today you would lose (284.00) from holding Shake Shack or give up 2.77% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Shake Shack vs. Enersys
Performance |
Timeline |
Shake Shack |
Enersys |
Shake Shack and Enersys Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shake Shack and Enersys
The main advantage of trading using opposite Shake Shack and Enersys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Enersys 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 Enersys will offset losses from the drop in Enersys' long position.Shake Shack vs. Imax Corp | Shake Shack vs. Marcus | Shake Shack vs. AMC Networks | Shake Shack vs. Cinemark Holdings |
Enersys vs. Kimball Electronics | Enersys vs. Hollysys Automation Technologies | Enersys vs. Hayward Holdings | Enersys vs. nVent Electric PLC |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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