Correlation Between Chipotle Mexican and Dine Brands
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Dine Brands 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 Dine Brands 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 Dine Brands Global, you can compare the effects of market volatilities on Chipotle Mexican and Dine Brands 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 Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Dine Brands.
Diversification Opportunities for Chipotle Mexican and Dine Brands
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chipotle and Dine is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global 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 Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Dine Brands go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Dine Brands
Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 0.7 times more return on investment than Dine Brands. However, Chipotle Mexican Grill is 1.43 times less risky than Dine Brands. It trades about 0.07 of its potential returns per unit of risk. Dine Brands Global is currently generating about -0.06 per unit of risk. If you would invest 3,305 in Chipotle Mexican Grill on October 23, 2024 and sell it today you would earn a total of 2,310 from holding Chipotle Mexican Grill or generate 69.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. Dine Brands Global
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Dine Brands Global |
Chipotle Mexican and Dine Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Dine Brands
The main advantage of trading using opposite Chipotle Mexican and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Dine Brands 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 Dine Brands will offset losses from the drop in Dine Brands' long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza Common | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
| Dine Brands vs. Chipotle Mexican Grill | Dine Brands vs. Yum Brands | Dine Brands vs. The Wendys Co | Dine Brands vs. Wingstop |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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