Correlation Between CAVA Group, and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both CAVA Group, 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 CAVA Group, and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAVA Group, and Chipotle Mexican Grill, you can compare the effects of market volatilities on CAVA Group, 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 CAVA Group, with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAVA Group, and Chipotle Mexican.
Diversification Opportunities for CAVA Group, and Chipotle Mexican
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CAVA and Chipotle is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, 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 CAVA Group, 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 CAVA Group, 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 CAVA Group, i.e., CAVA Group, and Chipotle Mexican go up and down completely randomly.
Pair Corralation between CAVA Group, and Chipotle Mexican
Given the investment horizon of 90 days CAVA Group, is expected to generate 0.99 times more return on investment than Chipotle Mexican. However, CAVA Group, is 1.01 times less risky than Chipotle Mexican. It trades about 0.06 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.05 per unit of risk. If you would invest 13,847 in CAVA Group, on August 28, 2024 and sell it today you would earn a total of 407.00 from holding CAVA Group, or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAVA Group, vs. Chipotle Mexican Grill
Performance |
| Timeline |
| CAVA Group, |
| Chipotle Mexican Grill |
CAVA Group, and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAVA Group, and Chipotle Mexican
The main advantage of trading using opposite CAVA Group, and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAVA Group, 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.| CAVA Group, vs. Organic Sales and | CAVA Group, vs. 51Talk Online Education | CAVA Group, vs. Apogee Therapeutics, Common | CAVA Group, vs. BOS Better Online |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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