Correlation Between Chipotle Mexican and Concrete Pumping

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Can any of the company-specific risk be diversified away by investing in both Chipotle Mexican and Concrete Pumping 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 Concrete Pumping 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 Concrete Pumping Holdings, you can compare the effects of market volatilities on Chipotle Mexican and Concrete Pumping 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 Concrete Pumping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipotle Mexican and Concrete Pumping.

Diversification Opportunities for Chipotle Mexican and Concrete Pumping

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Chipotle and Concrete is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Concrete Pumping Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concrete Pumping Holdings 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 Concrete Pumping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concrete Pumping Holdings has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Concrete Pumping go up and down completely randomly.

Pair Corralation between Chipotle Mexican and Concrete Pumping

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to under-perform the Concrete Pumping. But the stock apears to be less risky and, when comparing its historical volatility, Chipotle Mexican Grill is 1.19 times less risky than Concrete Pumping. The stock trades about -0.17 of its potential returns per unit of risk. The Concrete Pumping Holdings is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  670.00  in Concrete Pumping Holdings on July 3, 2022 and sell it today you would lose (25.00)  from holding Concrete Pumping Holdings or give up 3.73% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Chipotle Mexican Grill  vs.  Concrete Pumping Holdings

 Performance (%) 
       Timeline  
Chipotle Mexican Grill 
Chipotle Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Chipotle Mexican Grill are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting primary indicators, Chipotle Mexican may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Chipotle Price Channel

Concrete Pumping Holdings 
Concrete Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Concrete Pumping Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Concrete Pumping may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Concrete Price Channel

Chipotle Mexican and Concrete Pumping Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chipotle Mexican and Concrete Pumping

The main advantage of trading using opposite Chipotle Mexican and Concrete Pumping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Concrete Pumping 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 Concrete Pumping will offset losses from the drop in Concrete Pumping's long position.
Chipotle Mexican vs. Amazon Inc
The idea behind Chipotle Mexican Grill and Concrete Pumping Holdings 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.
Concrete Pumping vs. Amazon Inc
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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