Correlation Between Compass Group and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Compass Group 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 Compass Group and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Group PLC and Chipotle Mexican Grill, you can compare the effects of market volatilities on Compass Group 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 Compass Group with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and Chipotle Mexican.
Diversification Opportunities for Compass Group and Chipotle Mexican
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compass and Chipotle is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC 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 Compass Group 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 Compass Group PLC 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 Compass Group i.e., Compass Group and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Compass Group and Chipotle Mexican
Assuming the 90 days horizon Compass Group PLC is expected to under-perform the Chipotle Mexican. But the pink sheet apears to be less risky and, when comparing its historical volatility, Compass Group PLC is 1.13 times less risky than Chipotle Mexican. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Chipotle Mexican Grill is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 290,344 in Chipotle Mexican Grill on January 25, 2024 and sell it today you would earn a total of 2,332 from holding Chipotle Mexican Grill or generate 0.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Compass Group PLC vs. Chipotle Mexican Grill
Performance |
Timeline |
Compass Group PLC |
Chipotle Mexican Grill |
Compass Group and Chipotle Mexican Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Compass Group and Chipotle Mexican
The main advantage of trading using opposite Compass Group and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group 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 Compass Group PLC 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.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |