Correlation Between Spirent Communications and Chipotle Mexican

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

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

Diversification Opportunities for Spirent Communications and Chipotle Mexican

0.47

Correlation Coefficient

Spirent Communications  Chipotle Mexican

Very weak diversification

The 3 months correlation between Spirent and Chipotle is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc 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 Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Chipotle Mexican go up and down completely randomly.

Pair Corralation between Spirent Communications and Chipotle Mexican

Assuming the 90 days horizon Spirent Communications is expected to generate 2.34 times less return on investment than Chipotle Mexican. In addition to that, Spirent Communications is 1.16 times more volatile than Chipotle Mexican Grill. It trades about 0.02 of its total potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.06 per unit of volatility. If you would invest  4,155  in Chipotle Mexican Grill on April 24, 2025 and sell it today you would earn a total of  295.00  from holding Chipotle Mexican Grill or generate 7.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Spirent Communications plc  vs.  Chipotle Mexican Grill

Spirent Communications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spirent Communications plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Spirent Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Chipotle Mexican Grill

Risk-Adjusted Performance

Modest

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. Despite nearly fragile basic indicators, Chipotle Mexican may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Spirent Communications and Chipotle Mexican

The main advantage of trading using opposite Spirent Communications and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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 Spirent Communications plc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..