Correlation Between Chipotle Mexican and Sportsmap Tech

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

Diversification Opportunities for Chipotle Mexican and Sportsmap Tech

0.22

Correlation Coefficient

Chipotle Mexican  Sportsmap Tech

Modest diversification

The 3 months correlation between Chipotle and Sportsmap is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Sportsmap Tech Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmap Tech Acqui 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 Sportsmap Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmap Tech Acqui has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Sportsmap Tech go up and down completely randomly.

Pair Corralation between Chipotle Mexican and Sportsmap Tech

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 3.67 times more return on investment than Sportsmap Tech. However, Chipotle Mexican is 3.67 times more volatile than Sportsmap Tech Acquisition. It trades about 0.1 of its potential returns per unit of risk. Sportsmap Tech Acquisition is currently generating about 0.06 per unit of risk. If you would invest  2,742  in Chipotle Mexican Grill on September 21, 2024 and sell it today you would earn a total of  3,432  from holding Chipotle Mexican Grill or generate 125.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	28.08%
Values	Daily Returns

Chipotle Mexican Grill  vs.  Sportsmap Tech Acquisition

Chipotle Mexican Grill

Risk-Adjusted Performance

4 of 100

Modest

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 January 2025.

Sportsmap Tech Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sportsmap Tech Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sportsmap Tech is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Chipotle Mexican and Sportsmap Tech

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

The idea behind Chipotle Mexican Grill and Sportsmap Tech Acquisition 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 Global Correlations module to find global opportunities by holding instruments from different markets.