Correlation Between Goldman Sachs and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs 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 Goldman Sachs and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Goldman Sachs and Chipotle Mexican Grill, you can compare the effects of market volatilities on Goldman Sachs 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 Goldman Sachs with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Chipotle Mexican.
Diversification Opportunities for Goldman Sachs and Chipotle Mexican
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Chipotle is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The Goldman Sachs 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 Goldman Sachs 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 The Goldman Sachs 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 Goldman Sachs i.e., Goldman Sachs and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Goldman Sachs and Chipotle Mexican
Assuming the 90 days horizon The Goldman Sachs is expected to generate 0.28 times more return on investment than Chipotle Mexican. However, The Goldman Sachs is 3.52 times less risky than Chipotle Mexican. It trades about 0.16 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about -0.02 per unit of risk. If you would invest 565,603 in The Goldman Sachs on September 14, 2024 and sell it today you would earn a total of 623,293 from holding The Goldman Sachs or generate 110.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Goldman Sachs vs. Chipotle Mexican Grill
Performance |
| Timeline |
| Goldman Sachs |
| Chipotle Mexican Grill |
Goldman Sachs and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Chipotle Mexican
The main advantage of trading using opposite Goldman Sachs and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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.| Goldman Sachs vs. New Oriental Education | Goldman Sachs vs. Ameriprise Financial | Goldman Sachs vs. FibraHotel | Goldman Sachs vs. Grupo Hotelero Santa |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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