Correlation Between Chipotle Mexican and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Minerals Technologies 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 Minerals Technologies 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 Minerals Technologies, you can compare the effects of market volatilities on Chipotle Mexican and Minerals Technologies 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 Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Minerals Technologies.
Diversification Opportunities for Chipotle Mexican and Minerals Technologies
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chipotle and Minerals is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Minerals Technologies go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Minerals Technologies
Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 1.24 times more return on investment than Minerals Technologies. However, Chipotle Mexican is 1.24 times more volatile than Minerals Technologies. It trades about 0.23 of its potential returns per unit of risk. Minerals Technologies is currently generating about -0.06 per unit of risk. If you would invest 6,049 in Chipotle Mexican Grill on September 13, 2024 and sell it today you would earn a total of 508.00 from holding Chipotle Mexican Grill or generate 8.4% 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. Minerals Technologies
Performance |
Timeline |
Chipotle Mexican Grill |
Minerals Technologies |
Chipotle Mexican and Minerals Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chipotle Mexican and Minerals Technologies
The main advantage of trading using opposite Chipotle Mexican and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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