Correlation Between Potbelly and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Potbelly 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 Potbelly and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potbelly Co and Chipotle Mexican Grill, you can compare the effects of market volatilities on Potbelly 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 Potbelly with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potbelly and Chipotle Mexican.
Diversification Opportunities for Potbelly and Chipotle Mexican
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Potbelly and Chipotle is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Potbelly Co 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 Potbelly 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 Potbelly Co 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 Potbelly i.e., Potbelly and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Potbelly and Chipotle Mexican
Given the investment horizon of 90 days Potbelly Co is expected to generate 2.03 times more return on investment than Chipotle Mexican. However, Potbelly is 2.03 times more volatile than Chipotle Mexican Grill. It trades about 0.19 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about -0.03 per unit of risk. If you would invest 785.00 in Potbelly Co on October 26, 2024 and sell it today you would earn a total of 408.00 from holding Potbelly Co or generate 51.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Potbelly Co vs. Chipotle Mexican Grill
Performance |
| Timeline |
| Potbelly |
| Chipotle Mexican Grill |
Potbelly and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Potbelly and Chipotle Mexican
The main advantage of trading using opposite Potbelly and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potbelly 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.| Potbelly vs. Chipotle Mexican Grill | Potbelly vs. Dominos Pizza Common | Potbelly vs. Yum Brands | Potbelly vs. The Wendys Co |
| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza Common | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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