Correlation Between Chipotle Mexican and CAVA Group,
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and CAVA Group, 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 CAVA Group, 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 CAVA Group,, you can compare the effects of market volatilities on Chipotle Mexican and CAVA Group, 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 CAVA Group,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and CAVA Group,.
Diversification Opportunities for Chipotle Mexican and CAVA Group,
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chipotle and CAVA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and CAVA Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAVA 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 CAVA Group,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAVA Group, has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and CAVA Group, go up and down completely randomly.
Pair Corralation between Chipotle Mexican and CAVA Group,
Considering the 90-day investment horizon Chipotle Mexican is expected to generate 1.2 times less return on investment than CAVA Group,. In addition to that, Chipotle Mexican is 1.01 times more volatile than CAVA Group,. It trades about 0.05 of its total potential returns per unit of risk. CAVA Group, is currently generating about 0.06 per unit of volatility. 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 |
Chipotle Mexican Grill vs. CAVA Group,
Performance |
| Timeline |
| Chipotle Mexican Grill |
| CAVA Group, |
Chipotle Mexican and CAVA Group, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and CAVA Group,
The main advantage of trading using opposite Chipotle Mexican and CAVA Group, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, CAVA Group, 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 CAVA Group, will offset losses from the drop in CAVA Group,'s long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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