CHIPOTLE MEXICAN GRILL INC

457.83 -14.43 (-3.15%) Buy

CMG investors check their stop-losses as it underperforms

13 min read

CHIPOTLE MEXICAN GRILL INC was among the worst performers on Friday. It lost -3.15% to close at 457.83. It is currently trading +82% above it's 52 week low of 251.33 and is down only -12% from it's 52 week high.

[Themes containing CMG]

Buy-and-Hold investors in CMG experienced a maximum drawdown of -15.97% over the last three months. It lost -6.24% during this down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.

Trend

CMG has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, CMG underperformed the SP500 index on 50% days. Which indicates that on days CMG underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

CMG returned losses on 54% days in the last three months. During this time, it delivered on average -0.09% per day. It delivered it's worst daily return of -4.9%, during this period, on Wednesday, 24 Oct, 2018. There was initially a bearish trend during this period which started on 19 Sep, 2018 and went on till 25 Sep, 2018. The trend delivered -5.35% losses to investors. This was followed by a bullish trend that started on 25 Oct, 2018 and ended on 30 Oct, 2018. This bullish trend delivered +11.36% to investors.

CMG had 8 profitable and 4 loss making months over the last year. During the last year, number of profitable months of CMG and SP500 index were the same. CMG significantly outperformed SP500 index in Apr 2018, when it returned +36.05% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. CMG had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both CMG and SP500 index significantly outperform during months when quarterly/annual results are announced.

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CMG is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in CMG's volatility from 19 Sep, 2018 to 1 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that CMG has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

Investors trading in CMG derivatives at this moment can consider 'Bull Call Spread' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than CMG. Therefore, SP500 must receive a lower allocation than CMG in your portfolio. SP500 index usually has shorter drawdown period than CMG.

On a general note (since you are interested in CMG), if you are an investor in VIPS, you need to be extra careful (consider limiting your exposure or diversifying) as it is extremely unpredictable and therefore risky.

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