Correlation Between Shake Shack and Village Super
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Village Super 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 Village Super into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Village Super Market, you can compare the effects of market volatilities on Shake Shack and Village Super 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 Village Super. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Village Super.
Diversification Opportunities for Shake Shack and Village Super
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shake and Village is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Village Super Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Super Market 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 Village Super. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Super Market has no effect on the direction of Shake Shack i.e., Shake Shack and Village Super go up and down completely randomly.
Pair Corralation between Shake Shack and Village Super
Given the investment horizon of 90 days Shake Shack is expected to under-perform the Village Super. In addition to that, Shake Shack is 1.83 times more volatile than Village Super Market. It trades about -0.03 of its total potential returns per unit of risk. Village Super Market is currently generating about -0.01 per unit of volatility. If you would invest 2,806 in Village Super Market on January 30, 2024 and sell it today you would lose (7.00) from holding Village Super Market or give up 0.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Shake Shack vs. Village Super Market
Performance |
Timeline |
Shake Shack |
Village Super Market |
Shake Shack and Village Super Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shake Shack and Village Super
The main advantage of trading using opposite Shake Shack and Village Super positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Village Super 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 Village Super will offset losses from the drop in Village Super's long position.Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
Village Super vs. Ingles Markets Incorporated | Village Super vs. Natural Grocers by | Village Super vs. Grocery Outlet Holding | Village Super vs. Weis Markets |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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