Correlation Between Chipotle Mexican and 482480AM2

Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and 482480AM2 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 482480AM2 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 KLAC 495 15 JUL 52, you can compare the effects of market volatilities on Chipotle Mexican and 482480AM2 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 482480AM2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and 482480AM2.

Diversification Opportunities for Chipotle Mexican and 482480AM2

-0.69

Correlation Coefficient

Chipotle Mexican  482480AM2

Excellent diversification

The 3 months correlation between Chipotle and 482480AM2 is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and KLAC 495 15 JUL 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLAC 495 15 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 482480AM2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLAC 495 15 has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and 482480AM2 go up and down completely randomly.

Pair Corralation between Chipotle Mexican and 482480AM2

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to under-perform the 482480AM2. In addition to that, Chipotle Mexican is 1.58 times more volatile than KLAC 495 15 JUL 52. It trades about -0.19 of its total potential returns per unit of risk. KLAC 495 15 JUL 52 is currently generating about 0.11 per unit of volatility. If you would invest  9,133  in KLAC 495 15 JUL 52 on December 26, 2024 and sell it today you would earn a total of  658.00  from holding KLAC 495 15 JUL 52 or generate 7.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Chipotle Mexican Grill  vs.  KLAC 495 15 JUL 52

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.

KLAC 495 15

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KLAC 495 15 JUL 52 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, 482480AM2 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Chipotle Mexican and 482480AM2

The main advantage of trading using opposite Chipotle Mexican and 482480AM2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, 482480AM2 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 482480AM2 will offset losses from the drop in 482480AM2's long position.

The idea behind Chipotle Mexican Grill and KLAC 495 15 JUL 52 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.