Correlation Between Chipotle Mexican and Ishares Msci

Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Ishares Msci 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 Chipotle Mexican and Ishares Msci into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chipotle Mexican Grill and Ishares Msci Brazil, you can compare the effects of market volatilities on Chipotle Mexican and Ishares Msci 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 Chipotle Mexican with a short position of Ishares Msci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Ishares Msci.

Diversification Opportunities for Chipotle Mexican and Ishares Msci

0.27

Correlation Coefficient

Chipotle Mexican  Ishares Msci

Modest diversification

The 3 months correlation between Chipotle and Ishares is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Ishares Msci Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Msci Brazil and Chipotle Mexican 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 Chipotle Mexican Grill are associated (or correlated) with Ishares Msci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Msci Brazil has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Ishares Msci go up and down completely randomly.

Pair Corralation between Chipotle Mexican and Ishares Msci

Assuming the 90 days trading horizon Chipotle Mexican Grill is expected to generate 1.64 times more return on investment than Ishares Msci. However, Chipotle Mexican is 1.64 times more volatile than Ishares Msci Brazil. It trades about 0.18 of its potential returns per unit of risk. Ishares Msci Brazil is currently generating about -0.13 per unit of risk. If you would invest  1,560  in Chipotle Mexican Grill on September 13, 2024 and sell it today you would earn a total of  394.00  from holding Chipotle Mexican Grill or generate 25.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	41.27%
Values	Daily Returns

Chipotle Mexican Grill  vs.  Ishares Msci Brazil

Chipotle Mexican Grill

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chipotle Mexican Grill are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Chipotle Mexican sustained solid returns over the last few months and may actually be approaching a breakup point.

Ishares Msci Brazil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ishares Msci Brazil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Chipotle Mexican and Ishares Msci

The main advantage of trading using opposite Chipotle Mexican and Ishares Msci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Ishares Msci 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 Ishares Msci will offset losses from the drop in Ishares Msci's long position.

The idea behind Chipotle Mexican Grill and Ishares Msci Brazil pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.