Correlation Between Chipotle Mexican and Portillos
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Portillos 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 Portillos 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 Portillos, you can compare the effects of market volatilities on Chipotle Mexican and Portillos 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 Portillos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Portillos.
Diversification Opportunities for Chipotle Mexican and Portillos
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chipotle and Portillos is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Portillos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portillos 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 Portillos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portillos has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Portillos go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Portillos
Considering the 90-day investment horizon Chipotle Mexican Grill is expected to under-perform the Portillos. But the stock apears to be less risky and, when comparing its historical volatility, Chipotle Mexican Grill is 3.06 times less risky than Portillos. The stock trades about -0.07 of its potential returns per unit of risk. The Portillos is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 951.00 in Portillos on November 4, 2024 and sell it today you would earn a total of 440.00 from holding Portillos or generate 46.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. Portillos
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Portillos |
Chipotle Mexican and Portillos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Portillos
The main advantage of trading using opposite Chipotle Mexican and Portillos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Portillos 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 Portillos will offset losses from the drop in Portillos' long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza Common | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
| Portillos vs. Brinker International | Portillos vs. Bloomin Brands | Portillos vs. Wingstop | Portillos vs. Papa Johns International |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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