Correlation Between Chipotle Mexican and Stoneridge
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Stoneridge 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 Stoneridge 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 Stoneridge, you can compare the effects of market volatilities on Chipotle Mexican and Stoneridge 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 Stoneridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Stoneridge.
Diversification Opportunities for Chipotle Mexican and Stoneridge
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chipotle and Stoneridge is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Stoneridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoneridge 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 Stoneridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoneridge has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Stoneridge go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Stoneridge
Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 0.58 times more return on investment than Stoneridge. However, Chipotle Mexican Grill is 1.73 times less risky than Stoneridge. It trades about 0.08 of its potential returns per unit of risk. Stoneridge is currently generating about -0.1 per unit of risk. If you would invest 4,468 in Chipotle Mexican Grill on August 27, 2024 and sell it today you would earn a total of 1,733 from holding Chipotle Mexican Grill or generate 38.79% 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. Stoneridge
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Stoneridge |
Chipotle Mexican and Stoneridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Stoneridge
The main advantage of trading using opposite Chipotle Mexican and Stoneridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Stoneridge 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 Stoneridge will offset losses from the drop in Stoneridge'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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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