Correlation Between Chipotle Mexican and VARIOUS EATERIES
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and VARIOUS EATERIES 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 Chipotle Mexican and VARIOUS EATERIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chipotle Mexican Grill and VARIOUS EATERIES LS, you can compare the effects of market volatilities on Chipotle Mexican and VARIOUS EATERIES 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 Chipotle Mexican with a short position of VARIOUS EATERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and VARIOUS EATERIES.
Diversification Opportunities for Chipotle Mexican and VARIOUS EATERIES
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chipotle and VARIOUS is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and VARIOUS EATERIES LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VARIOUS EATERIES and Chipotle Mexican 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 Chipotle Mexican Grill are associated (or correlated) with VARIOUS EATERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VARIOUS EATERIES has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and VARIOUS EATERIES go up and down completely randomly.
Pair Corralation between Chipotle Mexican and VARIOUS EATERIES
Assuming the 90 days horizon Chipotle Mexican Grill is expected to generate 0.95 times more return on investment than VARIOUS EATERIES. However, Chipotle Mexican Grill is 1.06 times less risky than VARIOUS EATERIES. It trades about 0.07 of its potential returns per unit of risk. VARIOUS EATERIES LS is currently generating about -0.11 per unit of risk. If you would invest 3,739 in Chipotle Mexican Grill on August 31, 2024 and sell it today you would earn a total of 2,176 from holding Chipotle Mexican Grill or generate 58.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. VARIOUS EATERIES LS
Performance |
| Timeline |
| Chipotle Mexican Grill |
| VARIOUS EATERIES |
Chipotle Mexican and VARIOUS EATERIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and VARIOUS EATERIES
The main advantage of trading using opposite Chipotle Mexican and VARIOUS EATERIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, VARIOUS EATERIES 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 VARIOUS EATERIES will offset losses from the drop in VARIOUS EATERIES's long position.| Chipotle Mexican vs. McDonalds | Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Compass Group PLC | Chipotle Mexican vs. Yum Brands |
| VARIOUS EATERIES vs. McDonalds | VARIOUS EATERIES vs. Starbucks | VARIOUS EATERIES vs. Compass Group PLC | VARIOUS EATERIES vs. Yum Brands |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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