Correlation Between Chefs Warehouse and Sysco

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

By analyzing existing cross correlation between The Chefs Warehouse and Sysco, you can compare the effects of market volatilities on Chefs Warehouse and Sysco 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 Chefs Warehouse with a short position of Sysco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chefs Warehouse and Sysco.

Diversification Opportunities for Chefs Warehouse and Sysco

-0.21

Correlation Coefficient

Chefs Warehouse  Sysco

Very good diversification

The 3 months correlation between Chefs and Sysco is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding The Chefs Warehouse and Sysco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco and Chefs Warehouse 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 The Chefs Warehouse are associated (or correlated) with Sysco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco has no effect on the direction of Chefs Warehouse i.e., Chefs Warehouse and Sysco go up and down completely randomly.

Pair Corralation between Chefs Warehouse and Sysco

Given the investment horizon of 90 days The Chefs Warehouse is expected to generate 1.55 times more return on investment than Sysco. However, Chefs Warehouse is 1.55 times more volatile than Sysco. It trades about 0.01 of its potential returns per unit of risk. Sysco is currently generating about -0.05 per unit of risk. If you would invest  4,999  in The Chefs Warehouse on January 7, 2025 and sell it today you would lose (44.00) from holding The Chefs Warehouse or give up 0.88% of portfolio value over 90 days.

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

The Chefs Warehouse  vs.  Sysco

Chefs Warehouse

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Chefs Warehouse has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Chefs Warehouse is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sysco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sysco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sysco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chefs Warehouse and Sysco

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

The idea behind The Chefs Warehouse and Sysco 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.