Correlation Between Chipotle Mexican and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Whirlpool 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 Whirlpool 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 Whirlpool, you can compare the effects of market volatilities on Chipotle Mexican and Whirlpool 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 Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Whirlpool.
Diversification Opportunities for Chipotle Mexican and Whirlpool
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chipotle and Whirlpool is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Whirlpool go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Whirlpool
Considering the 90-day investment horizon Chipotle Mexican is expected to generate 2.6 times less return on investment than Whirlpool. But when comparing it to its historical volatility, Chipotle Mexican Grill is 1.14 times less risky than Whirlpool. It trades about 0.1 of its potential returns per unit of risk. Whirlpool is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 9,776 in Whirlpool on August 24, 2024 and sell it today you would earn a total of 1,428 from holding Whirlpool or generate 14.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. Whirlpool
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Whirlpool |
Chipotle Mexican and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Whirlpool
The main advantage of trading using opposite Chipotle Mexican and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool's long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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