Correlation Between GameStop Corp and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both GameStop Corp 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 GameStop Corp and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Chipotle Mexican Grill, you can compare the effects of market volatilities on GameStop Corp 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 GameStop Corp with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Chipotle Mexican.
Diversification Opportunities for GameStop Corp and Chipotle Mexican
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GameStop and Chipotle is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp 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 GameStop Corp 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 GameStop Corp 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 GameStop Corp i.e., GameStop Corp and Chipotle Mexican go up and down completely randomly.
Pair Corralation between GameStop Corp and Chipotle Mexican
Considering the 90-day investment horizon GameStop Corp is expected to generate 1.78 times more return on investment than Chipotle Mexican. However, GameStop Corp is 1.78 times more volatile than Chipotle Mexican Grill. It trades about 0.39 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.25 per unit of risk. If you would invest 2,218 in GameStop Corp on September 1, 2024 and sell it today you would earn a total of 687.00 from holding GameStop Corp or generate 30.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. Chipotle Mexican Grill
Performance |
| Timeline |
| GameStop Corp |
| Chipotle Mexican Grill |
GameStop Corp and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Chipotle Mexican
The main advantage of trading using opposite GameStop Corp and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp 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.| GameStop Corp vs. RH | GameStop Corp vs. Dicks Sporting Goods | GameStop Corp vs. Best Buy Co | GameStop Corp vs. AutoZone |
| Chipotle Mexican vs. The Wendys Co | Chipotle Mexican vs. Shake Shack | Chipotle Mexican vs. Papa Johns International | Chipotle Mexican vs. Darden Restaurants |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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