Correlation Between E Home and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both E Home 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 E Home and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Home Household Service and Chipotle Mexican Grill, you can compare the effects of market volatilities on E Home 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 E Home with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Home and Chipotle Mexican.
Diversification Opportunities for E Home and Chipotle Mexican
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EJH and Chipotle is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding E Home Household Service 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 E Home 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 E Home Household Service 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 E Home i.e., E Home and Chipotle Mexican go up and down completely randomly.
Pair Corralation between E Home and Chipotle Mexican
Considering the 90-day investment horizon E Home Household Service is expected to under-perform the Chipotle Mexican. In addition to that, E Home is 2.59 times more volatile than Chipotle Mexican Grill. It trades about -0.01 of its total potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.26 per unit of volatility. If you would invest 5,881 in Chipotle Mexican Grill on September 18, 2024 and sell it today you would earn a total of 548.00 from holding Chipotle Mexican Grill or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Home Household Service vs. Chipotle Mexican Grill
Performance |
| Timeline |
| E Home Household |
| Chipotle Mexican Grill |
E Home and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Home and Chipotle Mexican
The main advantage of trading using opposite E Home and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Home 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.| E Home vs. Smart Share Global | E Home vs. WW International | E Home vs. Frontdoor | E Home vs. Carriage Services |
| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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