Correlation Between Kenvue and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Kenvue 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 Kenvue and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenvue Inc and Chipotle Mexican Grill, you can compare the effects of market volatilities on Kenvue 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 Kenvue with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenvue and Chipotle Mexican.
Diversification Opportunities for Kenvue and Chipotle Mexican
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kenvue and Chipotle is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kenvue Inc 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 Kenvue 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 Kenvue Inc 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 Kenvue i.e., Kenvue and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Kenvue and Chipotle Mexican
Given the investment horizon of 90 days Kenvue is expected to generate 3.61 times less return on investment than Chipotle Mexican. But when comparing it to its historical volatility, Kenvue Inc is 1.11 times less risky than Chipotle Mexican. It trades about 0.02 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,654 in Chipotle Mexican Grill on September 14, 2024 and sell it today you would earn a total of 1,827 from holding Chipotle Mexican Grill or generate 39.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenvue Inc vs. Chipotle Mexican Grill
Performance |
| Timeline |
| Kenvue Inc |
| Chipotle Mexican Grill |
Kenvue and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenvue and Chipotle Mexican
The main advantage of trading using opposite Kenvue and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenvue 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.| Kenvue vs. Aquestive Therapeutics | Kenvue vs. U Power Limited | Kenvue vs. Avadel Pharmaceuticals PLC | Kenvue vs. Todos Medical |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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