Correlation Between Chipotle Mexican and WPLAU

Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and WPLAU 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 WPLAU 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 WPLAU 37 15 MAR 28, you can compare the effects of market volatilities on Chipotle Mexican and WPLAU 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 WPLAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and WPLAU.

Diversification Opportunities for Chipotle Mexican and WPLAU

0.52

Correlation Coefficient

Chipotle Mexican  WPLAU

Very weak diversification

The 3 months correlation between Chipotle and WPLAU is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and WPLAU 37 15 MAR 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPLAU 37 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 WPLAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPLAU 37 15 has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and WPLAU go up and down completely randomly.

Pair Corralation between Chipotle Mexican and WPLAU

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to generate 5.12 times more return on investment than WPLAU. However, Chipotle Mexican is 5.12 times more volatile than WPLAU 37 15 MAR 28. It trades about 0.01 of its potential returns per unit of risk. WPLAU 37 15 MAR 28 is currently generating about -0.11 per unit of risk. If you would invest  6,241  in Chipotle Mexican Grill on September 25, 2024 and sell it today you would lose (13.00) from holding Chipotle Mexican Grill or give up 0.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	26.19%
Values	Daily Returns

Chipotle Mexican Grill  vs.  WPLAU 37 15 MAR 28

Chipotle Mexican Grill

Risk-Adjusted Performance

4 of 100

Insignificant

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.

WPLAU 37 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WPLAU 37 15 MAR 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for WPLAU 37 15 MAR 28 investors.

Pair Trading with Chipotle Mexican and WPLAU

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

The idea behind Chipotle Mexican Grill and WPLAU 37 15 MAR 28 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.