Correlation Between Chipotle Mexican and Dave Busters

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

Diversification Opportunities for Chipotle Mexican and Dave Busters

0.61

Correlation Coefficient

Chipotle Mexican  Dave Busters

Poor diversification

The 3 months correlation between Chipotle and Dave is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Chipotle Mexican Grill and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta 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 Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of Chipotle Mexican i.e., Chipotle Mexican and Dave Busters go up and down completely randomly.

Pair Corralation between Chipotle Mexican and Dave Busters

Assuming the 90 days horizon Chipotle Mexican is expected to generate 3.16 times less return on investment than Dave Busters. But when comparing it to its historical volatility, Chipotle Mexican Grill is 1.89 times less risky than Dave Busters. It trades about 0.11 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,670  in Dave Busters Entertainment on April 22, 2025 and sell it today you would earn a total of  870.00  from holding Dave Busters Entertainment or generate 52.1% return on investment over 90 days.

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

Chipotle Mexican Grill  vs.  Dave Busters Entertainment

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 unsteady basic indicators, Chipotle Mexican reported solid returns over the last few months and may actually be approaching a breakup point.

Dave Busters Enterta

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Busters Entertainment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dave Busters reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chipotle Mexican and Dave Busters

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

The idea behind Chipotle Mexican Grill and Dave Busters Entertainment 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.