Correlation Between Valvoline and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Valvoline 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 Valvoline and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valvoline and Chipotle Mexican Grill, you can compare the effects of market volatilities on Valvoline 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 Valvoline with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valvoline and Chipotle Mexican.
Diversification Opportunities for Valvoline and Chipotle Mexican
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Valvoline and Chipotle is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Valvoline 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 Valvoline 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 Valvoline 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 Valvoline i.e., Valvoline and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Valvoline and Chipotle Mexican
Considering the 90-day investment horizon Valvoline is expected to generate 3.95 times less return on investment than Chipotle Mexican. But when comparing it to its historical volatility, Valvoline is 1.06 times less risky than Chipotle Mexican. It trades about 0.03 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,893 in Chipotle Mexican Grill on August 31, 2024 and sell it today you would earn a total of 3,259 from holding Chipotle Mexican Grill or generate 112.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valvoline vs. Chipotle Mexican Grill
Performance |
| Timeline |
| Valvoline |
| Chipotle Mexican Grill |
Valvoline and Chipotle Mexican Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valvoline and Chipotle Mexican
The main advantage of trading using opposite Valvoline and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valvoline 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.| Valvoline vs. Cosan SA ADR | Valvoline vs. Delek Energy | Valvoline vs. Crossamerica Partners LP | Valvoline vs. Par Pacific Holdings |
| Chipotle Mexican vs. RLJ Lodging Trust | Chipotle Mexican vs. Aquagold International | Chipotle Mexican vs. Stepstone Group | Chipotle Mexican vs. Morningstar Unconstrained Allocation |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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