Correlation Between Chipotle Mexican and Wynn Resorts

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

Diversification Opportunities for Chipotle Mexican and Wynn Resorts

0.35

Correlation Coefficient

Chipotle Mexican  Wynn Resorts

Weak diversification

The 3 months correlation between Chipotle and Wynn is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Wynn Resorts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Resorts Limited 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 Wynn Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Resorts Limited has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Wynn Resorts go up and down completely randomly.

Pair Corralation between Chipotle Mexican and Wynn Resorts

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to under-perform the Wynn Resorts. But the stock apears to be less risky and, when comparing its historical volatility, Chipotle Mexican Grill is 1.38 times less risky than Wynn Resorts. The stock trades about -0.51 of its potential returns per unit of risk. The Wynn Resorts Limited is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  8,878  in Wynn Resorts Limited on October 25, 2024 and sell it today you would lose (362.00) from holding Wynn Resorts Limited or give up 4.08% of portfolio value over 90 days.

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

Chipotle Mexican Grill  vs.  Wynn Resorts Limited

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Wynn Resorts Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wynn Resorts Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Chipotle Mexican and Wynn Resorts

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

The idea behind Chipotle Mexican Grill and Wynn Resorts Limited 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.