Correlation Between IPC MEXICO and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both IPC MEXICO 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 IPC MEXICO and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPC MEXICO and Chipotle Mexican Grill, you can compare the effects of market volatilities on IPC MEXICO 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 IPC MEXICO with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPC MEXICO and Chipotle Mexican.
Diversification Opportunities for IPC MEXICO and Chipotle Mexican
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IPC and Chipotle is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO 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 IPC MEXICO 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 IPC MEXICO 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 IPC MEXICO i.e., IPC MEXICO and Chipotle Mexican go up and down completely randomly.
Pair Corralation between IPC MEXICO and Chipotle Mexican
Assuming the 90 days trading horizon IPC MEXICO is expected to under-perform the Chipotle Mexican. But the index apears to be less risky and, when comparing its historical volatility, IPC MEXICO is 3.51 times less risky than Chipotle Mexican. The index trades about -0.1 of its potential returns per unit of risk. The Chipotle Mexican Grill is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 112,898 in Chipotle Mexican Grill on August 31, 2024 and sell it today you would earn a total of 15,824 from holding Chipotle Mexican Grill or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPC MEXICO vs. Chipotle Mexican Grill
Performance |
| Timeline |
IPC MEXICO and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
IPC MEXICO
Pair trading matchups for IPC MEXICO
Chipotle Mexican Grill
Pair trading matchups for Chipotle Mexican
Pair Trading with IPC MEXICO and Chipotle Mexican
The main advantage of trading using opposite IPC MEXICO and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPC MEXICO 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.| IPC MEXICO vs. Genworth Financial | IPC MEXICO vs. Cognizant Technology Solutions | IPC MEXICO vs. CVS Health | IPC MEXICO vs. First Republic Bank |
| Chipotle Mexican vs. DXC Technology | Chipotle Mexican vs. Micron Technology | Chipotle Mexican vs. Deutsche Bank Aktiengesellschaft | Chipotle Mexican vs. First Republic Bank |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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