Correlation Between Stepstone and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Stepstone 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 Stepstone and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Chipotle Mexican Grill, you can compare the effects of market volatilities on Stepstone 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 Stepstone with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Chipotle Mexican.
Diversification Opportunities for Stepstone and Chipotle Mexican
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stepstone and Chipotle is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group 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 Stepstone 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 Stepstone Group 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 Stepstone i.e., Stepstone and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Stepstone and Chipotle Mexican
Given the investment horizon of 90 days Stepstone Group is expected to generate 1.83 times more return on investment than Chipotle Mexican. However, Stepstone is 1.83 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 0.15 per unit of risk. If you would invest 5,900 in Stepstone Group on September 2, 2024 and sell it today you would earn a total of 689.00 from holding Stepstone Group or generate 11.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Chipotle Mexican Grill
Performance |
| Timeline |
| Stepstone Group |
| Chipotle Mexican Grill |
Stepstone and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Chipotle Mexican
The main advantage of trading using opposite Stepstone and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone 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.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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