Correlation Between Chipotle Mexican and Jollibee Foods

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

Diversification Opportunities for Chipotle Mexican and Jollibee Foods

-0.43

Correlation Coefficient

Chipotle Mexican  Jollibee Foods

Very good diversification

The 3 months correlation between Chipotle and Jollibee is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Jollibee Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jollibee Foods 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 Jollibee Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jollibee Foods has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Jollibee Foods go up and down completely randomly.

Pair Corralation between Chipotle Mexican and Jollibee Foods

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate about the same return on investment as Jollibee Foods. But, Chipotle Mexican Grill is 1.57 times less risky than Jollibee Foods. It trades about 0.09 of its potential returns per unit of risk. Jollibee Foods is currently generating about 0.05 per unit of risk. If you would invest  414.00  in Jollibee Foods on October 3, 2024 and sell it today you would earn a total of  42.00  from holding Jollibee Foods or generate 10.14% 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.  Jollibee Foods

Chipotle Mexican Grill

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chipotle Mexican Grill are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Chipotle Mexican may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jollibee Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jollibee Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Jollibee Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chipotle Mexican and Jollibee Foods

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

The idea behind Chipotle Mexican Grill and Jollibee Foods 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.