Correlation Between Chipotle Mexican and Ballys Corp

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

Diversification Opportunities for Chipotle Mexican and Ballys Corp

0.34

Correlation Coefficient

Chipotle Mexican  Ballys Corp

Weak diversification

The 3 months correlation between Chipotle and Ballys is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Ballys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballys Corp 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 Ballys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballys Corp has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Ballys Corp go up and down completely randomly.

Pair Corralation between Chipotle Mexican and Ballys Corp

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to under-perform the Ballys Corp. But the stock apears to be less risky and, when comparing its historical volatility, Chipotle Mexican Grill is 4.48 times less risky than Ballys Corp. The stock trades about -0.16 of its potential returns per unit of risk. The Ballys Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,785  in Ballys Corp on December 29, 2024 and sell it today you would lose (521.00) from holding Ballys Corp or give up 29.19% of portfolio value over 90 days.

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

Chipotle Mexican Grill  vs.  Ballys Corp

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. Despite unfluctuating performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ballys Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ballys Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential 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.

Pair Trading with Chipotle Mexican and Ballys Corp

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

The idea behind Chipotle Mexican Grill and Ballys Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.