Correlation Between Energisa and Chipotle Mexican

Can any of the company-specific risk be diversified away by investing in both Energisa 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 Energisa and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energisa SA and Chipotle Mexican Grill, you can compare the effects of market volatilities on Energisa 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 Energisa with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Chipotle Mexican.

Diversification Opportunities for Energisa and Chipotle Mexican

-0.13

Correlation Coefficient

Energisa  Chipotle Mexican

Good diversification

The 3 months correlation between Energisa and Chipotle is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA 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 Energisa 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 Energisa SA 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 Energisa i.e., Energisa and Chipotle Mexican go up and down completely randomly.

Pair Corralation between Energisa and Chipotle Mexican

Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Chipotle Mexican. But the stock apears to be less risky and, when comparing its historical volatility, Energisa SA is 1.58 times less risky than Chipotle Mexican. The stock trades about -0.15 of its potential returns per unit of risk. The Chipotle Mexican Grill is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,560  in Chipotle Mexican Grill on June 30, 2024 and sell it today you would lose (6.00) from holding Chipotle Mexican Grill or give up 0.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Energisa SA  vs.  Chipotle Mexican Grill

Energisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisa SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Energisa is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Chipotle Mexican Grill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chipotle Mexican Grill has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Energisa and Chipotle Mexican

The main advantage of trading using opposite Energisa and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa 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 Energisa SA 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.