Correlation Between Chipotle Mexican and Good Times
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Good Times 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 Good Times 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 Good Times Restaurants, you can compare the effects of market volatilities on Chipotle Mexican and Good Times 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 Good Times. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Good Times.
Diversification Opportunities for Chipotle Mexican and Good Times
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chipotle and Good is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Good Times Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Times Restaurants 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 Good Times. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Times Restaurants has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Good Times go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Good Times
Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 1.43 times more return on investment than Good Times. However, Chipotle Mexican is 1.43 times more volatile than Good Times Restaurants. It trades about 0.05 of its potential returns per unit of risk. Good Times Restaurants is currently generating about -0.15 per unit of risk. If you would invest 6,060 in Chipotle Mexican Grill on August 27, 2024 and sell it today you would earn a total of 140.00 from holding Chipotle Mexican Grill or generate 2.31% 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. Good Times Restaurants
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Good Times Restaurants |
Chipotle Mexican and Good Times Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Good Times
The main advantage of trading using opposite Chipotle Mexican and Good Times positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Good Times 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 Good Times will offset losses from the drop in Good Times' long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
| Good Times vs. Nathans Famous | Good Times vs. FAT Brands | Good Times vs. El Pollo Loco | Good Times vs. Ark Restaurants Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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