Correlation Between Chipotle Mexican and Flutter Entertainment

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

Diversification Opportunities for Chipotle Mexican and Flutter Entertainment

0.35

Correlation Coefficient

Chipotle Mexican  Flutter Entertainment

Weak diversification

The 3 months correlation between Chipotle and Flutter is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Flutter Entertainment plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flutter Entertainment plc 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 Flutter Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flutter Entertainment plc has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Flutter Entertainment go up and down completely randomly.

Pair Corralation between Chipotle Mexican and Flutter Entertainment

Considering the 90-day investment horizon Chipotle Mexican Grill is expected to under-perform the Flutter Entertainment. In addition to that, Chipotle Mexican is 1.36 times more volatile than Flutter Entertainment plc. It trades about -0.06 of its total potential returns per unit of risk. Flutter Entertainment plc is currently generating about 0.22 per unit of volatility. If you would invest  24,099  in Flutter Entertainment plc on April 30, 2025 and sell it today you would earn a total of  6,425  from holding Flutter Entertainment plc or generate 26.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chipotle Mexican Grill  vs.  Flutter Entertainment plc

Chipotle Mexican Grill

Risk-Adjusted Performance

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 stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Flutter Entertainment plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Flutter Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chipotle Mexican and Flutter Entertainment

The main advantage of trading using opposite Chipotle Mexican and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipotle Mexican position performs unexpectedly, Flutter Entertainment 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 Flutter Entertainment will offset losses from the drop in Flutter Entertainment's long position.

The idea behind Chipotle Mexican Grill and Flutter Entertainment plc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.