Correlation Between CMR SAB and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both CMR SAB and Chipotle Mexican 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 CMR SAB and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMR SAB de and Chipotle Mexican Grill, you can compare the effects of market volatilities on CMR SAB and Chipotle Mexican 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 CMR SAB with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMR SAB and Chipotle Mexican.
Diversification Opportunities for CMR SAB and Chipotle Mexican
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CMR and Chipotle is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CMR SAB de and Chipotle Mexican Grill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chipotle Mexican Grill and CMR SAB 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 CMR SAB de are associated (or correlated) with Chipotle Mexican. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chipotle Mexican Grill has no effect on the direction of CMR SAB i.e., CMR SAB and Chipotle Mexican go up and down completely randomly.
Pair Corralation between CMR SAB and Chipotle Mexican
Assuming the 90 days trading horizon CMR SAB de is expected to under-perform the Chipotle Mexican. In addition to that, CMR SAB is 1.86 times more volatile than Chipotle Mexican Grill. It trades about -0.1 of its total potential returns per unit of risk. Chipotle Mexican Grill is currently generating about -0.14 per unit of volatility. If you would invest 123,200 in Chipotle Mexican Grill on December 29, 2024 and sell it today you would lose (22,155) from holding Chipotle Mexican Grill or give up 17.98% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.41% |
Values | Daily Returns |
CMR SAB de vs. Chipotle Mexican Grill
Performance |
Timeline |
CMR SAB de |
Chipotle Mexican Grill |
CMR SAB and Chipotle Mexican Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CMR SAB and Chipotle Mexican
The main advantage of trading using opposite CMR SAB and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMR SAB position performs unexpectedly, Chipotle Mexican 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 Chipotle Mexican will offset losses from the drop in Chipotle Mexican's long position.CMR SAB vs. Grupo Sports World | CMR SAB vs. Ameriprise Financial | CMR SAB vs. DXC Technology | CMR SAB vs. Prudential Financial |
Chipotle Mexican vs. Salesforce, | Chipotle Mexican vs. Grupo Industrial Saltillo | Chipotle Mexican vs. Air Transport Services | Chipotle Mexican vs. DXC Technology |
Check out your portfolio center.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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