Correlation Between GALENA MINING and Chipotle Mexican

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

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

Diversification Opportunities for GALENA MINING and Chipotle Mexican

0.0

Correlation Coefficient

GALENA MINING  Chipotle Mexican

Pay attention - limited upside

The 3 months correlation between GALENA and Chipotle is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GALENA MINING LTD 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 GALENA MINING 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 GALENA MINING LTD 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 GALENA MINING i.e., GALENA MINING and Chipotle Mexican go up and down completely randomly.

Pair Corralation between GALENA MINING and Chipotle Mexican

Assuming the 90 days horizon GALENA MINING LTD is expected to under-perform the Chipotle Mexican. In addition to that, GALENA MINING is 3.52 times more volatile than Chipotle Mexican Grill. It trades about -0.02 of its total potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.08 per unit of volatility. If you would invest  2,946  in Chipotle Mexican Grill on October 5, 2024 and sell it today you would earn a total of  2,838  from holding Chipotle Mexican Grill or generate 96.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GALENA MINING LTD  vs.  Chipotle Mexican Grill

GALENA MINING LTD

Risk-Adjusted Performance

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Very Weak

Over the last 90 days GALENA MINING LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GALENA MINING is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Chipotle Mexican Grill

Risk-Adjusted Performance

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OK

Over the last 90 days Chipotle Mexican Grill has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Chipotle Mexican reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GALENA MINING and Chipotle Mexican

The main advantage of trading using opposite GALENA MINING and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GALENA MINING 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 GALENA MINING LTD 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.