Correlation Between Playtika Holding and Chipotle Mexican

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

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

Diversification Opportunities for Playtika Holding and Chipotle Mexican

0.63

Correlation Coefficient

Playtika Holding  Chipotle Mexican

Poor diversification

The 3 months correlation between Playtika and Chipotle is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp 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 Playtika Holding 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 Playtika Holding Corp 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 Playtika Holding i.e., Playtika Holding and Chipotle Mexican go up and down completely randomly.

Pair Corralation between Playtika Holding and Chipotle Mexican

Given the investment horizon of 90 days Playtika Holding Corp is expected to under-perform the Chipotle Mexican. In addition to that, Playtika Holding is 1.64 times more volatile than Chipotle Mexican Grill. It trades about -0.25 of its total potential returns per unit of risk. Chipotle Mexican Grill is currently generating about -0.1 per unit of volatility. If you would invest  6,054  in Chipotle Mexican Grill on December 2, 2024 and sell it today you would lose (657.00) from holding Chipotle Mexican Grill or give up 10.85% of portfolio value over 90 days.

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

Playtika Holding Corp  vs.  Chipotle Mexican Grill

Playtika Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Playtika Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Chipotle Mexican Grill

Risk-Adjusted Performance

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 latest weak performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Playtika Holding and Chipotle Mexican

The main advantage of trading using opposite Playtika Holding and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtika Holding 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 Playtika Holding Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.