Correlation Between Chipotle Mexican and Afya
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Afya 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 Afya 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 Afya, you can compare the effects of market volatilities on Chipotle Mexican and Afya 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 Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Afya.
Diversification Opportunities for Chipotle Mexican and Afya
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chipotle and Afya is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya 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 Afya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afya has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Afya go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Afya
Considering the 90-day investment horizon Chipotle Mexican Grill is expected to under-perform the Afya. But the stock apears to be less risky and, when comparing its historical volatility, Chipotle Mexican Grill is 1.35 times less risky than Afya. The stock trades about -0.32 of its potential returns per unit of risk. The Afya is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,524 in Afya on October 20, 2024 and sell it today you would earn a total of 50.00 from holding Afya or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. Afya
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Afya |
Chipotle Mexican and Afya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Afya
The main advantage of trading using opposite Chipotle Mexican and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Afya 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 Afya will offset losses from the drop in Afya's long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza Common | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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