Correlation Between Citigroup and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Citigroup and Chipotle Mexican 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 Citigroup and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Chipotle Mexican Grill, you can compare the effects of market volatilities on Citigroup and Chipotle Mexican 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 Citigroup with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Chipotle Mexican.
Diversification Opportunities for Citigroup and Chipotle Mexican
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Chipotle is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Chipotle Mexican Grill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chipotle Mexican Grill and Citigroup 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 Citigroup are associated (or correlated) with Chipotle Mexican. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chipotle Mexican Grill has no effect on the direction of Citigroup i.e., Citigroup and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Citigroup and Chipotle Mexican
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.15 times less return on investment than Chipotle Mexican. But when comparing it to its historical volatility, Citigroup is 1.25 times less risky than Chipotle Mexican. It trades about 0.08 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,486 in Chipotle Mexican Grill on August 29, 2024 and sell it today you would earn a total of 1,482 from holding Chipotle Mexican Grill or generate 33.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.58% |
| Values | Daily Returns |
Citigroup vs. Chipotle Mexican Grill
Performance |
| Timeline |
| Citigroup |
| Chipotle Mexican Grill |
Citigroup and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Chipotle Mexican
The main advantage of trading using opposite Citigroup and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Chipotle Mexican 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 Chipotle Mexican will offset losses from the drop in Chipotle Mexican's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Chipotle Mexican vs. INTER CARS SA | Chipotle Mexican vs. SYSTEMAIR AB | Chipotle Mexican vs. COMMERCIAL VEHICLE | Chipotle Mexican vs. Ryanair Holdings 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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