Correlation Between Chipotle Mexican and Primo Brands
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Primo Brands 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 Primo Brands 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 Primo Brands, you can compare the effects of market volatilities on Chipotle Mexican and Primo Brands 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 Primo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Primo Brands.
Diversification Opportunities for Chipotle Mexican and Primo Brands
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chipotle and Primo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Primo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Brands 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 Primo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Brands has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Primo Brands go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Primo Brands
Considering the 90-day investment horizon Chipotle Mexican is expected to generate 2.07 times less return on investment than Primo Brands. In addition to that, Chipotle Mexican is 1.01 times more volatile than Primo Brands. It trades about 0.07 of its total potential returns per unit of risk. Primo Brands is currently generating about 0.15 per unit of volatility. If you would invest 2,616 in Primo Brands on August 28, 2024 and sell it today you would earn a total of 215.00 from holding Primo Brands or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. Primo Brands
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Primo Brands |
Chipotle Mexican and Primo Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Primo Brands
The main advantage of trading using opposite Chipotle Mexican and Primo Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Primo Brands 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 Primo Brands will offset losses from the drop in Primo Brands' long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
| Primo Brands vs. The Coca Cola | Primo Brands vs. National Beverage Corp | Primo Brands vs. Keurig Dr Pepper | Primo Brands vs. Coca Cola Femsa SAB |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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