Correlation Between Chipotle Mexican and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Alaska Air 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 Alaska Air 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 Alaska Air Group, you can compare the effects of market volatilities on Chipotle Mexican and Alaska Air 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 Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Alaska Air.
Diversification Opportunities for Chipotle Mexican and Alaska Air
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chipotle and Alaska is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Alaska Air go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Alaska Air
Assuming the 90 days horizon Chipotle Mexican is expected to generate 4.92 times less return on investment than Alaska Air. But when comparing it to its historical volatility, Chipotle Mexican Grill is 1.08 times less risky than Alaska Air. It trades about 0.02 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,836 in Alaska Air Group on September 3, 2024 and sell it today you would earn a total of 1,141 from holding Alaska Air Group or generate 29.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. Alaska Air Group
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Alaska Air Group |
Chipotle Mexican and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Alaska Air
The main advantage of trading using opposite Chipotle Mexican and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| Chipotle Mexican vs. ANTA SPORTS PRODUCT | Chipotle Mexican vs. TRADEDOUBLER AB SK | Chipotle Mexican vs. RCS MediaGroup SpA | Chipotle Mexican vs. Vastned Retail NV |
| Alaska Air vs. Zijin Mining Group | Alaska Air vs. Jacquet Metal Service | Alaska Air vs. Western Copper and | Alaska Air vs. United Airlines Holdings |
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.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |