Correlation Between Chipotle Mexican and PlayAGS

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

Diversification Opportunities for Chipotle Mexican and PlayAGS

-0.46

Correlation Coefficient

Chipotle Mexican  PlayAGS

Very good diversification

The 3 months correlation between Chipotle and PlayAGS is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and PlayAGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayAGS 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 PlayAGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayAGS has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and PlayAGS go up and down completely randomly.

Pair Corralation between Chipotle Mexican and PlayAGS

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to under-perform the PlayAGS. In addition to that, Chipotle Mexican is 5.34 times more volatile than PlayAGS. It trades about -0.03 of its total potential returns per unit of risk. PlayAGS is currently generating about -0.04 per unit of volatility. If you would invest  1,165  in PlayAGS on October 10, 2024 and sell it today you would lose (6.00) from holding PlayAGS or give up 0.52% of portfolio value over 90 days.

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

Chipotle Mexican Grill  vs.  PlayAGS

Chipotle Mexican Grill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chipotle Mexican Grill has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Chipotle Mexican is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PlayAGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PlayAGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, PlayAGS is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Chipotle Mexican and PlayAGS

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

The idea behind Chipotle Mexican Grill and PlayAGS 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.