Correlation Between Chipotle Mexican and Magnite
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Magnite 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 Magnite 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 Magnite, you can compare the effects of market volatilities on Chipotle Mexican and Magnite 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 Magnite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Magnite.
Diversification Opportunities for Chipotle Mexican and Magnite
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chipotle and Magnite is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite 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 Magnite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnite has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Magnite go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Magnite
Considering the 90-day investment horizon Chipotle Mexican is expected to generate 2.07 times less return on investment than Magnite. But when comparing it to its historical volatility, Chipotle Mexican Grill is 2.05 times less risky than Magnite. It trades about 0.08 of its potential returns per unit of risk. Magnite is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 938.00 in Magnite on September 3, 2024 and sell it today you would earn a total of 741.00 from holding Magnite or generate 79.0% 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. Magnite
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Magnite |
Chipotle Mexican and Magnite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Magnite
The main advantage of trading using opposite Chipotle Mexican and Magnite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Magnite 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 Magnite will offset losses from the drop in Magnite's long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Highway Holdings Limited | Chipotle Mexican vs. QCR Holdings | Chipotle Mexican vs. Partner Communications |
| Magnite vs. Deluxe | Magnite vs. Clear Channel Outdoor | Magnite vs. Entravision Communications | Magnite vs. Innovid 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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