Correlation Between Chipotle Mexican and Fiesta Restaurant
Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Fiesta Restaurant 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 Fiesta Restaurant 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 Fiesta Restaurant Group, you can compare the effects of market volatilities on Chipotle Mexican and Fiesta Restaurant 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 Fiesta Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Fiesta Restaurant.
Diversification Opportunities for Chipotle Mexican and Fiesta Restaurant
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chipotle and Fiesta is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Fiesta Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiesta Restaurant 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 Fiesta Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiesta Restaurant has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Fiesta Restaurant go up and down completely randomly.
Pair Corralation between Chipotle Mexican and Fiesta Restaurant
If you would invest 290,344 in Chipotle Mexican Grill on January 25, 2024 and sell it today you would earn a total of 1,156 from holding Chipotle Mexican Grill or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Chipotle Mexican Grill vs. Fiesta Restaurant Group
Performance |
| Timeline |
| Chipotle Mexican Grill |
| Fiesta Restaurant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chipotle Mexican and Fiesta Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipotle Mexican and Fiesta Restaurant
The main advantage of trading using opposite Chipotle Mexican and Fiesta Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Fiesta Restaurant 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 Fiesta Restaurant will offset losses from the drop in Fiesta Restaurant's long position.| Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
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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 Stocks Directory module to find actively traded stocks across global markets.
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