Correlation Between Chipotle Mexican and SGHC
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and SGHC 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 SGHC 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 SGHC Limited, you can compare the effects of market volatilities on Chipotle Mexican and SGHC 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 SGHC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and SGHC.
Diversification Opportunities for Chipotle Mexican and SGHC
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chipotle and SGHC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and SGHC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGHC Limited 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 SGHC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGHC Limited has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and SGHC go up and down completely randomly.
Pair Corralation between Chipotle Mexican and SGHC
Considering the 90-day investment horizon Chipotle Mexican is expected to generate 15.41 times less return on investment than SGHC. But when comparing it to its historical volatility, Chipotle Mexican Grill is 1.88 times less risky than SGHC. It trades about 0.06 of its potential returns per unit of risk. SGHC Limited is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 418.00 in SGHC Limited on August 30, 2024 and sell it today you would earn a total of 255.00 from holding SGHC Limited or generate 61.0% 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. SGHC Limited
Performance |
| Timeline |
| Chipotle Mexican Grill |
| SGHC Limited |
Chipotle Mexican and SGHC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and SGHC
The main advantage of trading using opposite Chipotle Mexican and SGHC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, SGHC 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 SGHC will offset losses from the drop in SGHC's long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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