Correlation Between Chipotle Mexican and Interactive Strength

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

Diversification Opportunities for Chipotle Mexican and Interactive Strength

0.74

Correlation Coefficient

Chipotle Mexican  Interactive Strength

Poor diversification

The 3 months correlation between Chipotle and Interactive is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Interactive Strength Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Strength 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 Interactive Strength. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Strength has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Interactive Strength go up and down completely randomly.

Pair Corralation between Chipotle Mexican and Interactive Strength

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 0.15 times more return on investment than Interactive Strength. However, Chipotle Mexican Grill is 6.84 times less risky than Interactive Strength. It trades about -0.16 of its potential returns per unit of risk. Interactive Strength Common is currently generating about -0.06 per unit of risk. If you would invest  6,009  in Chipotle Mexican Grill on December 30, 2024 and sell it today you would lose (1,018) from holding Chipotle Mexican Grill or give up 16.94% of portfolio value over 90 days.

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

Chipotle Mexican Grill  vs.  Interactive Strength Common

Chipotle Mexican Grill

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Interactive Strength

Risk-Adjusted Performance

Very Weak

Over the last 90 days Interactive Strength Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Chipotle Mexican and Interactive Strength

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

The idea behind Chipotle Mexican Grill and Interactive Strength Common 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.