Correlation Between Chipotle Mexican and Westrock Coffee
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee, you can compare the effects of market volatilities on Chipotle Mexican and Westrock Coffee 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 Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Westrock Coffee.
Diversification Opportunities for Chipotle Mexican and Westrock Coffee
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chipotle and Westrock is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Westrock Coffee go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Westrock Coffee
Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 0.68 times more return on investment than Westrock Coffee. However, Chipotle Mexican Grill is 1.46 times less risky than Westrock Coffee. It trades about -0.01 of its potential returns per unit of risk. Westrock Coffee is currently generating about -0.16 per unit of risk. If you would invest 4,899 in Chipotle Mexican Grill on January 18, 2025 and sell it today you would lose (82.00) from holding Chipotle Mexican Grill or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. Westrock Coffee
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Westrock Coffee |
Chipotle Mexican and Westrock Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Westrock Coffee
The main advantage of trading using opposite Chipotle Mexican and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza Common | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse Foods |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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