Correlation Between Golden Matrix and Shake Shack

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

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

Diversification Opportunities for Golden Matrix and Shake Shack

0.23

Correlation Coefficient

Golden Matrix  Shake Shack

Modest diversification

The 3 months correlation between Golden and Shake is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Golden Matrix Group and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack and Golden Matrix 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 Golden Matrix Group 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 Golden Matrix i.e., Golden Matrix and Shake Shack go up and down completely randomly.

Pair Corralation between Golden Matrix and Shake Shack

Given the investment horizon of 90 days Golden Matrix Group is expected to under-perform the Shake Shack. In addition to that, Golden Matrix is 2.22 times more volatile than Shake Shack. It trades about -0.01 of its total potential returns per unit of risk. Shake Shack is currently generating about 0.23 per unit of volatility. If you would invest  10,180  in Shake Shack on September 14, 2024 and sell it today you would earn a total of  3,637  from holding Shake Shack or generate 35.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Golden Matrix Group  vs.  Shake Shack

Golden Matrix Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Matrix Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Golden Matrix is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Shake Shack

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shake Shack are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Shake Shack disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Matrix and Shake Shack

The main advantage of trading using opposite Golden Matrix and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Matrix 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 Golden Matrix Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.