Correlation Between Eshallgo and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Eshallgo 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 Eshallgo and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eshallgo Class A and Chipotle Mexican Grill, you can compare the effects of market volatilities on Eshallgo 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 Eshallgo with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eshallgo and Chipotle Mexican.
Diversification Opportunities for Eshallgo and Chipotle Mexican
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eshallgo and Chipotle is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Eshallgo Class A 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 Eshallgo 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 Eshallgo Class A 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 Eshallgo i.e., Eshallgo and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Eshallgo and Chipotle Mexican
Given the investment horizon of 90 days Eshallgo Class A is expected to generate 2.19 times more return on investment than Chipotle Mexican. However, Eshallgo is 2.19 times more volatile than Chipotle Mexican Grill. It trades about 0.03 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about -0.01 per unit of risk. If you would invest 109.00 in Eshallgo Class A on November 18, 2024 and sell it today you would earn a total of 1.00 from holding Eshallgo Class A or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eshallgo Class A vs. Chipotle Mexican Grill
Performance |
| Timeline |
| Eshallgo Class A |
| Chipotle Mexican Grill |
Eshallgo and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eshallgo and Chipotle Mexican
The main advantage of trading using opposite Eshallgo and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eshallgo 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.The idea behind Eshallgo Class A and Chipotle Mexican Grill pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza Common | 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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