Correlation Between Chipotle Mexican and Intelligent Group

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

Diversification Opportunities for Chipotle Mexican and Intelligent Group

0.29

Correlation Coefficient

Chipotle Mexican  Intelligent Group

Modest diversification

The 3 months correlation between Chipotle and Intelligent is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Intelligent Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intelligent Group 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 Intelligent Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intelligent Group has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Intelligent Group go up and down completely randomly.

Pair Corralation between Chipotle Mexican and Intelligent Group

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 0.35 times more return on investment than Intelligent Group. However, Chipotle Mexican Grill is 2.87 times less risky than Intelligent Group. It trades about -0.04 of its potential returns per unit of risk. Intelligent Group Limited is currently generating about -0.04 per unit of risk. If you would invest  5,944  in Chipotle Mexican Grill on October 24, 2024 and sell it today you would lose (355.00) from holding Chipotle Mexican Grill or give up 5.97% 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.  Intelligent Group Limited

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.

Intelligent Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intelligent Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in February 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Pair Trading with Chipotle Mexican and Intelligent Group

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

The idea behind Chipotle Mexican Grill and Intelligent Group Limited 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.