Correlation Between JD SPORTS and Chipotle Mexican

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

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

Diversification Opportunities for JD SPORTS and Chipotle Mexican

0.62

Correlation Coefficient

JD SPORTS  Chipotle Mexican

Poor diversification

The 3 months correlation between 9JD and Chipotle is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH 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 JD SPORTS 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 JD SPORTS FASH 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 JD SPORTS i.e., JD SPORTS and Chipotle Mexican go up and down completely randomly.

Pair Corralation between JD SPORTS and Chipotle Mexican

Assuming the 90 days horizon JD SPORTS is expected to generate 1.02 times less return on investment than Chipotle Mexican. In addition to that, JD SPORTS is 1.31 times more volatile than Chipotle Mexican Grill. It trades about 0.08 of its total potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.11 per unit of volatility. If you would invest  4,021  in Chipotle Mexican Grill on April 21, 2025 and sell it today you would earn a total of  579.00  from holding Chipotle Mexican Grill or generate 14.4% return on investment over 90 days.

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

JD SPORTS FASH  vs.  Chipotle Mexican Grill

JD SPORTS FASH

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JD SPORTS FASH are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, JD SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

Chipotle Mexican Grill

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chipotle Mexican Grill are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Chipotle Mexican reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD SPORTS and Chipotle Mexican

The main advantage of trading using opposite JD SPORTS and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS 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 JD SPORTS FASH 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.