Correlation Between Funko and Chipotle Mexican

Can any of the company-specific risk be diversified away by investing in both Funko 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 Funko and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Funko Inc and Chipotle Mexican Grill, you can compare the effects of market volatilities on Funko 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 Funko with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and Chipotle Mexican.

Diversification Opportunities for Funko and Chipotle Mexican

-0.09

Correlation Coefficient

Funko  Chipotle Mexican

Good diversification

The 3 months correlation between Funko and Chipotle is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc 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 Funko 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 Funko Inc 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 Funko i.e., Funko and Chipotle Mexican go up and down completely randomly.

Pair Corralation between Funko and Chipotle Mexican

Given the investment horizon of 90 days Funko Inc is expected to generate 1.54 times more return on investment than Chipotle Mexican. However, Funko is 1.54 times more volatile than Chipotle Mexican Grill. It trades about 0.18 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.01 per unit of risk. If you would invest  553.00  in Funko Inc on October 12, 2024 and sell it today you would earn a total of  897.00  from holding Funko Inc or generate 162.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.47%
Values	Daily Returns

Funko Inc  vs.  Chipotle Mexican Grill

Funko Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, Funko displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Funko and Chipotle Mexican

The main advantage of trading using opposite Funko and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko 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.

The idea behind Funko Inc and Chipotle Mexican Grill 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 Transaction History module to view history of all your transactions and understand their impact on performance.