Correlation Between Chipotle Mexican and Liberty Resources
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Liberty Resources 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 Liberty Resources 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 Liberty Resources Acquisition, you can compare the effects of market volatilities on Chipotle Mexican and Liberty Resources 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 Liberty Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Liberty Resources.
Diversification Opportunities for Chipotle Mexican and Liberty Resources
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chipotle and Liberty is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Liberty Resources Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Resources 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 Liberty Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Resources has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Liberty Resources go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Liberty Resources
If you would invest 5,798 in Chipotle Mexican Grill on October 8, 2024 and sell it today you would earn a total of 172.00 from holding Chipotle Mexican Grill or generate 2.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 1.61% |
Values | Daily Returns |
Chipotle Mexican Grill vs. Liberty Resources Acquisition
Performance |
Timeline |
Chipotle Mexican Grill |
Liberty Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chipotle Mexican and Liberty Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chipotle Mexican and Liberty Resources
The main advantage of trading using opposite Chipotle Mexican and Liberty Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Liberty Resources 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 Liberty Resources will offset losses from the drop in Liberty Resources' long position.Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza Common | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
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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.
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