Correlation Between Chipotle Mexican and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Skechers USA 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 Skechers USA 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 Skechers USA, you can compare the effects of market volatilities on Chipotle Mexican and Skechers USA 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 Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Skechers USA.
Diversification Opportunities for Chipotle Mexican and Skechers USA
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chipotle and Skechers is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA 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 Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Skechers USA go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Skechers USA
Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 0.89 times more return on investment than Skechers USA. However, Chipotle Mexican Grill is 1.12 times less risky than Skechers USA. It trades about 0.07 of its potential returns per unit of risk. Skechers USA is currently generating about 0.04 per unit of risk. If you would invest 4,591 in Chipotle Mexican Grill on September 4, 2024 and sell it today you would earn a total of 1,463 from holding Chipotle Mexican Grill or generate 31.87% 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. Skechers USA
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Skechers USA |
Chipotle Mexican and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Skechers USA
The main advantage of trading using opposite Chipotle Mexican and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA's long position.| Chipotle Mexican vs. Hyatt Hotels | Chipotle Mexican vs. Smart Share Global | Chipotle Mexican vs. Sweetgreen | Chipotle Mexican vs. Wyndham Hotels Resorts |
| Skechers USA vs. On Holding | Skechers USA vs. Steven Madden | Skechers USA vs. Crocs Inc | Skechers USA vs. Designer Brands |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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