Correlation Between RCI Hospitality and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality 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 RCI Hospitality and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCI Hospitality Holdings and Chipotle Mexican Grill, you can compare the effects of market volatilities on RCI Hospitality 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 RCI Hospitality with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Chipotle Mexican.
Diversification Opportunities for RCI Hospitality and Chipotle Mexican
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RCI and Chipotle is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality 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 RCI Hospitality 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 RCI Hospitality 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 RCI Hospitality i.e., RCI Hospitality and Chipotle Mexican go up and down completely randomly.
Pair Corralation between RCI Hospitality and Chipotle Mexican
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 1.97 times more return on investment than Chipotle Mexican. However, RCI Hospitality is 1.97 times more volatile than Chipotle Mexican Grill. It trades about 0.36 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.32 per unit of risk. If you would invest 4,328 in RCI Hospitality Holdings on September 3, 2024 and sell it today you would earn a total of 918.00 from holding RCI Hospitality Holdings or generate 21.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Chipotle Mexican Grill
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Chipotle Mexican Grill |
RCI Hospitality and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Chipotle Mexican
The main advantage of trading using opposite RCI Hospitality and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality 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.| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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