Correlation Between Chipotle Mexican and Sonder Holdings
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Sonder Holdings 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 Sonder Holdings 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 Sonder Holdings, you can compare the effects of market volatilities on Chipotle Mexican and Sonder Holdings 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 Sonder Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Sonder Holdings.
Diversification Opportunities for Chipotle Mexican and Sonder Holdings
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chipotle and Sonder is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Sonder Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonder Holdings 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 Sonder Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonder Holdings has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Sonder Holdings go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Sonder Holdings
Considering the 90-day investment horizon Chipotle Mexican is expected to generate 4.73 times less return on investment than Sonder Holdings. But when comparing it to its historical volatility, Chipotle Mexican Grill is 7.54 times less risky than Sonder Holdings. It trades about 0.25 of its potential returns per unit of risk. Sonder Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 273.00 in Sonder Holdings on September 1, 2024 and sell it today you would earn a total of 100.00 from holding Sonder Holdings or generate 36.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. Sonder Holdings
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Sonder Holdings |
Chipotle Mexican and Sonder Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Sonder Holdings
The main advantage of trading using opposite Chipotle Mexican and Sonder Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Sonder Holdings 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 Sonder Holdings will offset losses from the drop in Sonder Holdings' long position.| Chipotle Mexican vs. The Wendys Co | Chipotle Mexican vs. Shake Shack | Chipotle Mexican vs. Papa Johns International | Chipotle Mexican vs. Darden Restaurants |
| Sonder Holdings vs. Wyndham Hotels Resorts | Sonder Holdings vs. InterContinental Hotels Group | Sonder Holdings vs. Hyatt Hotels | Sonder Holdings vs. Hilton Worldwide 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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