Correlation Between Chipotle Mexican and Sadot

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

Diversification Opportunities for Chipotle Mexican and Sadot

0.56

Correlation Coefficient

Chipotle Mexican  Sadot

Very weak diversification

The 3 months correlation between Chipotle and Sadot is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Sadot Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sadot 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 Sadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sadot Group has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Sadot go up and down completely randomly.

Pair Corralation between Chipotle Mexican and Sadot

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to under-perform the Sadot. But the stock apears to be less risky and, when comparing its historical volatility, Chipotle Mexican Grill is 2.78 times less risky than Sadot. The stock trades about -0.39 of its potential returns per unit of risk. The Sadot Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  362.00  in Sadot Group on October 10, 2024 and sell it today you would earn a total of  29.00  from holding Sadot Group or generate 8.01% return on investment over 90 days.

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

Chipotle Mexican Grill  vs.  Sadot Group

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.

Sadot Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sadot Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sadot unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chipotle Mexican and Sadot

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

The idea behind Chipotle Mexican Grill and Sadot Group 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 Stocks Directory module to find actively traded stocks across global markets.