Correlation Between New Oriental and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both New Oriental 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 New Oriental and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and Chipotle Mexican Grill, you can compare the effects of market volatilities on New Oriental 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 New Oriental with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Chipotle Mexican.
Diversification Opportunities for New Oriental and Chipotle Mexican
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between New and Chipotle is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education 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 New Oriental 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 New Oriental Education 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 New Oriental i.e., New Oriental and Chipotle Mexican go up and down completely randomly.
Pair Corralation between New Oriental and Chipotle Mexican
Assuming the 90 days trading horizon New Oriental Education is expected to under-perform the Chipotle Mexican. But the stock apears to be less risky and, when comparing its historical volatility, New Oriental Education is 20.52 times less risky than Chipotle Mexican. The stock trades about -0.3 of its potential returns per unit of risk. The Chipotle Mexican Grill is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 121,103 in Chipotle Mexican Grill on August 30, 2024 and sell it today you would earn a total of 8,027 from holding Chipotle Mexican Grill or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. Chipotle Mexican Grill
Performance |
| Timeline |
| New Oriental Education |
| Chipotle Mexican Grill |
New Oriental and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Chipotle Mexican
The main advantage of trading using opposite New Oriental and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental 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.| New Oriental vs. The Select Sector | New Oriental vs. SPDR Series Trust | New Oriental vs. FibroGen | New Oriental vs. iShares Trust |
| Chipotle Mexican vs. Applied Materials | Chipotle Mexican vs. Verizon Communications | Chipotle Mexican vs. Samsung Electronics Co | Chipotle Mexican vs. New Oriental Education |
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 CEOs Directory module to screen CEOs from public companies around the world.
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