Correlation Between Chipotle Mexican and SGS SA
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and SGS SA 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 SGS SA 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 SGS SA, you can compare the effects of market volatilities on Chipotle Mexican and SGS SA 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 SGS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and SGS SA.
Diversification Opportunities for Chipotle Mexican and SGS SA
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chipotle and SGS is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA 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 SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and SGS SA go up and down completely randomly.
Pair Corralation between Chipotle Mexican and SGS SA
Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 1.7 times more return on investment than SGS SA. However, Chipotle Mexican is 1.7 times more volatile than SGS SA. It trades about 0.05 of its potential returns per unit of risk. SGS SA is currently generating about -0.28 per unit of risk. If you would invest 6,060 in Chipotle Mexican Grill on August 27, 2024 and sell it today you would earn a total of 140.00 from holding Chipotle Mexican Grill or generate 2.31% 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. SGS SA
Performance |
| Timeline |
| Chipotle Mexican Grill |
| SGS SA |
Chipotle Mexican and SGS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and SGS SA
The main advantage of trading using opposite Chipotle Mexican and SGS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, SGS SA 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 SGS SA will offset losses from the drop in SGS SA's long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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