Correlation Between Destination and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Destination 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 Destination and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Destination XL Group and Chipotle Mexican Grill, you can compare the effects of market volatilities on Destination 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 Destination with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destination and Chipotle Mexican.
Diversification Opportunities for Destination and Chipotle Mexican
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Destination and Chipotle is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Destination XL Group 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 Destination 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 Destination XL Group 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 Destination i.e., Destination and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Destination and Chipotle Mexican
Given the investment horizon of 90 days Destination XL Group is expected to under-perform the Chipotle Mexican. In addition to that, Destination is 1.2 times more volatile than Chipotle Mexican Grill. It trades about -0.12 of its total potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.24 per unit of volatility. If you would invest 290,542 in Chipotle Mexican Grill on February 5, 2024 and sell it today you would earn a total of 24,996 from holding Chipotle Mexican Grill or generate 8.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Destination XL Group vs. Chipotle Mexican Grill
Performance |
Timeline |
Destination XL Group |
Chipotle Mexican Grill |
Destination and Chipotle Mexican Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Destination and Chipotle Mexican
The main advantage of trading using opposite Destination and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Destination 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.Destination vs. Cato Corporation | Destination vs. Zumiez Inc | Destination vs. Tillys Inc | Destination vs. Duluth Holdings |
Chipotle Mexican vs. Starbucks | Chipotle Mexican vs. Dominos Pizza | Chipotle Mexican vs. Yum Brands | Chipotle Mexican vs. The Wendys Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |