Correlation Between Hilton Worldwide and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide 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 Hilton Worldwide and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Worldwide Holdings and Chipotle Mexican Grill, you can compare the effects of market volatilities on Hilton Worldwide 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 Hilton Worldwide with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and Chipotle Mexican.
Diversification Opportunities for Hilton Worldwide and Chipotle Mexican
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hilton and Chipotle is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings 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 Hilton Worldwide 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 Hilton Worldwide Holdings 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 Hilton Worldwide i.e., Hilton Worldwide and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Hilton Worldwide and Chipotle Mexican
Considering the 90-day investment horizon Hilton Worldwide is expected to generate 6.69 times less return on investment than Chipotle Mexican. But when comparing it to its historical volatility, Hilton Worldwide Holdings is 1.51 times less risky than Chipotle Mexican. It trades about 0.06 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.26 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Worldwide Holdings vs. Chipotle Mexican Grill
Performance |
| Timeline |
| Hilton Worldwide Holdings |
| Chipotle Mexican Grill |
Hilton Worldwide and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Worldwide and Chipotle Mexican
The main advantage of trading using opposite Hilton Worldwide and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide 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.| Hilton Worldwide vs. Tuniu Corp | Hilton Worldwide vs. TripAdvisor | Hilton Worldwide vs. Thayer Ventures Acquisition |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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