Correlation Between Travelers Companies and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Travelers Companies 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 Travelers Companies and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Travelers Companies and Chipotle Mexican Grill, you can compare the effects of market volatilities on Travelers Companies 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 Travelers Companies with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Chipotle Mexican.
Diversification Opportunities for Travelers Companies and Chipotle Mexican
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and Chipotle is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies 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 Travelers Companies 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 The Travelers Companies 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 Travelers Companies i.e., Travelers Companies and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Travelers Companies and Chipotle Mexican
Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the Chipotle Mexican. In addition to that, Travelers Companies is 1.87 times more volatile than Chipotle Mexican Grill. It trades about -0.11 of its total potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.07 per unit of volatility. If you would invest 290,344 in Chipotle Mexican Grill on January 25, 2024 and sell it today you would earn a total of 4,047 from holding Chipotle Mexican Grill or generate 1.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
The Travelers Companies vs. Chipotle Mexican Grill
Performance |
Timeline |
The Travelers Companies |
Chipotle Mexican Grill |
Travelers Companies and Chipotle Mexican Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Travelers Companies and Chipotle Mexican
The main advantage of trading using opposite Travelers Companies and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies 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.Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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