Correlation Between Chipotle Mexican and Ballys Corp
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Ballys Corp 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 Ballys Corp 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 Ballys Corp, you can compare the effects of market volatilities on Chipotle Mexican and Ballys Corp 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 Ballys Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Ballys Corp.
Diversification Opportunities for Chipotle Mexican and Ballys Corp
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chipotle and Ballys is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Ballys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballys Corp 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 Ballys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballys Corp has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Ballys Corp go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Ballys Corp
Considering the 90-day investment horizon Chipotle Mexican Grill is expected to under-perform the Ballys Corp. In addition to that, Chipotle Mexican is 4.65 times more volatile than Ballys Corp. It trades about -0.33 of its total potential returns per unit of risk. Ballys Corp is currently generating about 0.46 per unit of volatility. If you would invest 1,774 in Ballys Corp on October 23, 2024 and sell it today you would earn a total of 36.00 from holding Ballys Corp or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. Ballys Corp
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Ballys Corp |
Chipotle Mexican and Ballys Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Ballys Corp
The main advantage of trading using opposite Chipotle Mexican and Ballys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Ballys Corp 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 Ballys Corp will offset losses from the drop in Ballys Corp's long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza Common | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
| Ballys Corp vs. Chipotle Mexican Grill | Ballys Corp vs. Yum Brands | Ballys Corp vs. The Wendys Co | Ballys Corp vs. McDonalds |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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