Correlation Between Shake Shack and Wynn Resorts
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Wynn Resorts 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 Wynn Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Wynn Resorts Limited, you can compare the effects of market volatilities on Shake Shack and Wynn Resorts 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 Wynn Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Wynn Resorts.
Diversification Opportunities for Shake Shack and Wynn Resorts
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shake and Wynn is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Wynn Resorts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Resorts Limited 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 Wynn Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Resorts Limited has no effect on the direction of Shake Shack i.e., Shake Shack and Wynn Resorts go up and down completely randomly.
Pair Corralation between Shake Shack and Wynn Resorts
Given the investment horizon of 90 days Shake Shack is expected to generate 1.19 times more return on investment than Wynn Resorts. However, Shake Shack is 1.19 times more volatile than Wynn Resorts Limited. It trades about 0.07 of its potential returns per unit of risk. Wynn Resorts Limited is currently generating about 0.05 per unit of risk. If you would invest 4,198 in Shake Shack on February 9, 2024 and sell it today you would earn a total of 6,078 from holding Shake Shack or generate 144.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Shake Shack vs. Wynn Resorts Limited
Performance |
Timeline |
Shake Shack |
Wynn Resorts Limited |
Shake Shack and Wynn Resorts Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shake Shack and Wynn Resorts
The main advantage of trading using opposite Shake Shack and Wynn Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Wynn Resorts 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 Wynn Resorts will offset losses from the drop in Wynn Resorts' long position.Shake Shack vs. Angel Oak Financial | Shake Shack vs. iShares Aaa | Shake Shack vs. Gladstone Commercial | Shake Shack vs. Allianzgi Convertible Income |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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