Correlation Between Chipotle Mexican and Red Robin
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Red Robin 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 Red Robin 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 Red Robin Gourmet, you can compare the effects of market volatilities on Chipotle Mexican and Red Robin 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 Red Robin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Red Robin.
Diversification Opportunities for Chipotle Mexican and Red Robin
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chipotle and Red is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Red Robin Gourmet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Robin Gourmet 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 Red Robin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Robin Gourmet has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Red Robin go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Red Robin
Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 0.42 times more return on investment than Red Robin. However, Chipotle Mexican Grill is 2.37 times less risky than Red Robin. It trades about 0.09 of its potential returns per unit of risk. Red Robin Gourmet is currently generating about 0.0 per unit of risk. If you would invest 3,019 in Chipotle Mexican Grill on August 28, 2024 and sell it today you would earn a total of 3,252 from holding Chipotle Mexican Grill or generate 107.72% 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. Red Robin Gourmet
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Red Robin Gourmet |
Chipotle Mexican and Red Robin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Red Robin
The main advantage of trading using opposite Chipotle Mexican and Red Robin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Red Robin 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 Red Robin will offset losses from the drop in Red Robin's long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
| Red Robin vs. Dine Brands Global | Red Robin vs. Bloomin Brands | Red Robin vs. BJs Restaurants | Red Robin vs. The Cheesecake Factory |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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