Correlation Between Chipotle Mexican and GameStop Corp
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and GameStop 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 GameStop 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 GameStop Corp, you can compare the effects of market volatilities on Chipotle Mexican and GameStop 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 GameStop Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and GameStop Corp.
Diversification Opportunities for Chipotle Mexican and GameStop Corp
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chipotle and GameStop is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop 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 GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and GameStop Corp go up and down completely randomly.
Pair Corralation between Chipotle Mexican and GameStop Corp
Considering the 90-day investment horizon Chipotle Mexican is expected to generate 2.78 times less return on investment than GameStop Corp. But when comparing it to its historical volatility, Chipotle Mexican Grill is 1.78 times less risky than GameStop Corp. It trades about 0.25 of its potential returns per unit of risk. GameStop Corp is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 2,218 in GameStop Corp on September 1, 2024 and sell it today you would earn a total of 687.00 from holding GameStop Corp or generate 30.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. GameStop Corp
Performance |
| Timeline |
| Chipotle Mexican Grill |
| GameStop Corp |
Chipotle Mexican and GameStop Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and GameStop Corp
The main advantage of trading using opposite Chipotle Mexican and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, GameStop 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 GameStop Corp will offset losses from the drop in GameStop Corp's long position.| Chipotle Mexican vs. The Wendys Co | Chipotle Mexican vs. Shake Shack | Chipotle Mexican vs. Papa Johns International | Chipotle Mexican vs. Darden Restaurants |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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