Correlation Between Brinker International and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Brinker International and Chipotle Mexican 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 Brinker International and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and Chipotle Mexican Grill, you can compare the effects of market volatilities on Brinker International and Chipotle Mexican 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 Brinker International with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Chipotle Mexican.
Diversification Opportunities for Brinker International and Chipotle Mexican
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brinker and Chipotle is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Chipotle Mexican Grill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chipotle Mexican Grill and Brinker International 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 Brinker International are associated (or correlated) with Chipotle Mexican. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chipotle Mexican Grill has no effect on the direction of Brinker International i.e., Brinker International and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Brinker International and Chipotle Mexican
Considering the 90-day investment horizon Brinker International is expected to generate 1.03 times more return on investment than Chipotle Mexican. However, Brinker International is 1.03 times more volatile than Chipotle Mexican Grill. It trades about 0.48 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.1 per unit of risk. If you would invest 9,432 in Brinker International on August 24, 2024 and sell it today you would earn a total of 3,078 from holding Brinker International or generate 32.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brinker International vs. Chipotle Mexican Grill
Performance |
| Timeline |
| Brinker International |
| Chipotle Mexican Grill |
Brinker International and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinker International and Chipotle Mexican
The main advantage of trading using opposite Brinker International and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, Chipotle Mexican 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 Chipotle Mexican will offset losses from the drop in Chipotle Mexican's long position.| Brinker International vs. Chipotle Mexican Grill | Brinker International vs. Eshallgo Class A | Brinker International vs. Amtech Systems | Brinker International vs. Gold Fields Ltd |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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