Correlation Between Chipotle Mexican and Interactive Brokers
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Interactive Brokers 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 Interactive Brokers 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 Interactive Brokers Group, you can compare the effects of market volatilities on Chipotle Mexican and Interactive Brokers 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 Interactive Brokers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Interactive Brokers.
Diversification Opportunities for Chipotle Mexican and Interactive Brokers
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chipotle and Interactive is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Interactive Brokers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Brokers 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 Interactive Brokers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Brokers has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Interactive Brokers go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Interactive Brokers
Considering the 90-day investment horizon Chipotle Mexican is expected to generate 4.4 times less return on investment than Interactive Brokers. But when comparing it to its historical volatility, Chipotle Mexican Grill is 1.66 times less risky than Interactive Brokers. It trades about 0.15 of its potential returns per unit of risk. Interactive Brokers Group is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 15,358 in Interactive Brokers Group on September 2, 2024 and sell it today you would earn a total of 3,751 from holding Interactive Brokers Group or generate 24.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. Interactive Brokers Group
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Interactive Brokers |
Chipotle Mexican and Interactive Brokers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Interactive Brokers
The main advantage of trading using opposite Chipotle Mexican and Interactive Brokers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Interactive Brokers 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 Interactive Brokers will offset losses from the drop in Interactive Brokers' long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
| Interactive Brokers vs. Cars Inc | Interactive Brokers vs. Yuexiu Transport Infrastructure | Interactive Brokers vs. Dana Inc | Interactive Brokers vs. Thor Industries |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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