Correlation Between La Rosa and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both La Rosa 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 La Rosa and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between La Rosa Holdings and Chipotle Mexican Grill, you can compare the effects of market volatilities on La Rosa 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 La Rosa with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Rosa and Chipotle Mexican.
Diversification Opportunities for La Rosa and Chipotle Mexican
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LRHC and Chipotle is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding La Rosa 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 La Rosa 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 La Rosa 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 La Rosa i.e., La Rosa and Chipotle Mexican go up and down completely randomly.
Pair Corralation between La Rosa and Chipotle Mexican
Given the investment horizon of 90 days La Rosa is expected to generate 1.12 times less return on investment than Chipotle Mexican. In addition to that, La Rosa is 9.57 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 0.13 per unit of volatility. If you would invest 5,352 in Chipotle Mexican Grill on September 3, 2024 and sell it today you would earn a total of 800.00 from holding Chipotle Mexican Grill or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
La Rosa Holdings vs. Chipotle Mexican Grill
Performance |
| Timeline |
| La Rosa Holdings |
| Chipotle Mexican Grill |
La Rosa and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with La Rosa and Chipotle Mexican
The main advantage of trading using opposite La Rosa and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Rosa 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.The idea behind La Rosa Holdings and Chipotle Mexican Grill pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Chipotle Mexican vs. Highway Holdings Limited | Chipotle Mexican vs. QCR Holdings | Chipotle Mexican vs. Partner Communications | Chipotle Mexican vs. Acumen Pharmaceuticals |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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