Correlation Between Chipotle Mexican and Harsco

Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Harsco 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 Harsco 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 Harsco 575 percent, you can compare the effects of market volatilities on Chipotle Mexican and Harsco 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 Harsco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Harsco.

Diversification Opportunities for Chipotle Mexican and Harsco

0.02

Correlation Coefficient

Chipotle Mexican  Harsco

Significant diversification

The 3 months correlation between Chipotle and Harsco is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Harsco 575 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harsco 575 percent 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 Harsco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harsco 575 percent has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Harsco go up and down completely randomly.

Pair Corralation between Chipotle Mexican and Harsco

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 0.55 times more return on investment than Harsco. However, Chipotle Mexican Grill is 1.81 times less risky than Harsco. It trades about -0.4 of its potential returns per unit of risk. Harsco 575 percent is currently generating about -0.25 per unit of risk. If you would invest  6,483  in Chipotle Mexican Grill on October 11, 2024 and sell it today you would lose (691.00) from holding Chipotle Mexican Grill or give up 10.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Chipotle Mexican Grill  vs.  Harsco 575 percent

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.

Harsco 575 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harsco 575 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for Harsco 575 percent investors.

Pair Trading with Chipotle Mexican and Harsco

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

The idea behind Chipotle Mexican Grill and Harsco 575 percent 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.