Correlation Between Chipotle Mexican and Royal Caribbean
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Royal Caribbean 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 Royal Caribbean 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 Royal Caribbean Cruises, you can compare the effects of market volatilities on Chipotle Mexican and Royal Caribbean 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 Royal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Royal Caribbean.
Diversification Opportunities for Chipotle Mexican and Royal Caribbean
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chipotle and Royal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Royal Caribbean Cruises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean Cruises 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 Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Cruises has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Royal Caribbean go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Royal Caribbean
Considering the 90-day investment horizon Chipotle Mexican is expected to generate 5.87 times less return on investment than Royal Caribbean. In addition to that, Chipotle Mexican is 1.14 times more volatile than Royal Caribbean Cruises. It trades about 0.05 of its total potential returns per unit of risk. Royal Caribbean Cruises is currently generating about 0.36 per unit of volatility. If you would invest 20,352 in Royal Caribbean Cruises on August 27, 2024 and sell it today you would earn a total of 3,797 from holding Royal Caribbean Cruises or generate 18.66% 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. Royal Caribbean Cruises
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Royal Caribbean Cruises |
Chipotle Mexican and Royal Caribbean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Royal Caribbean
The main advantage of trading using opposite Chipotle Mexican and Royal Caribbean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Royal Caribbean 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 Royal Caribbean will offset losses from the drop in Royal Caribbean's long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
| Royal Caribbean vs. Carnival | Royal Caribbean vs. Airbnb Inc | Royal Caribbean vs. Expedia Group | Royal Caribbean vs. Booking Holdings |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |