Correlation Between URBAN OUTFITTERS and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both URBAN OUTFITTERS 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 URBAN OUTFITTERS and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between URBAN OUTFITTERS and Chipotle Mexican Grill, you can compare the effects of market volatilities on URBAN OUTFITTERS 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 URBAN OUTFITTERS with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of URBAN OUTFITTERS and Chipotle Mexican.
Diversification Opportunities for URBAN OUTFITTERS and Chipotle Mexican
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between URBAN and Chipotle is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS i.e., URBAN OUTFITTERS and Chipotle Mexican go up and down completely randomly.
Pair Corralation between URBAN OUTFITTERS and Chipotle Mexican
Assuming the 90 days trading horizon URBAN OUTFITTERS is expected to generate 1.4 times more return on investment than Chipotle Mexican. However, URBAN OUTFITTERS is 1.4 times more volatile than Chipotle Mexican Grill. It trades about 0.07 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.1 per unit of risk. If you would invest 2,236 in URBAN OUTFITTERS on September 14, 2024 and sell it today you would earn a total of 2,664 from holding URBAN OUTFITTERS or generate 119.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
URBAN OUTFITTERS vs. Chipotle Mexican Grill
Performance |
Timeline |
URBAN OUTFITTERS |
Chipotle Mexican Grill |
URBAN OUTFITTERS and Chipotle Mexican Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with URBAN OUTFITTERS and Chipotle Mexican
The main advantage of trading using opposite URBAN OUTFITTERS and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if URBAN OUTFITTERS 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.URBAN OUTFITTERS vs. Apple Inc | URBAN OUTFITTERS vs. Apple Inc | URBAN OUTFITTERS vs. Apple Inc | URBAN OUTFITTERS vs. Apple Inc |
Chipotle Mexican vs. STMICROELECTRONICS | Chipotle Mexican vs. Renesas Electronics | Chipotle Mexican vs. Meiko Electronics Co | Chipotle Mexican vs. URBAN OUTFITTERS |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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