Correlation Between Chipotle Mexican and FIBRA Prologis

Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and FIBRA Prologis 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 FIBRA Prologis 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 FIBRA Prologis, you can compare the effects of market volatilities on Chipotle Mexican and FIBRA Prologis 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 FIBRA Prologis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and FIBRA Prologis.

Diversification Opportunities for Chipotle Mexican and FIBRA Prologis

-0.54

Correlation Coefficient

Chipotle Mexican  FIBRA Prologis

Excellent diversification

The 3 months correlation between Chipotle and FIBRA is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and FIBRA Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIBRA Prologis 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 FIBRA Prologis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIBRA Prologis has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and FIBRA Prologis go up and down completely randomly.

Pair Corralation between Chipotle Mexican and FIBRA Prologis

Assuming the 90 days trading horizon Chipotle Mexican Grill is expected to under-perform the FIBRA Prologis. But the stock apears to be less risky and, when comparing its historical volatility, Chipotle Mexican Grill is 1.06 times less risky than FIBRA Prologis. The stock trades about -0.2 of its potential returns per unit of risk. The FIBRA Prologis is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,830  in FIBRA Prologis on December 24, 2024 and sell it today you would earn a total of  688.00  from holding FIBRA Prologis or generate 11.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chipotle Mexican Grill  vs.  FIBRA Prologis

Chipotle Mexican Grill

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chipotle Mexican Grill has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

FIBRA Prologis

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIBRA Prologis are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, FIBRA Prologis disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chipotle Mexican and FIBRA Prologis

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

The idea behind Chipotle Mexican Grill and FIBRA Prologis 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.