Correlation Between Alliance Entertainment and Chefs Warehouse
Can any of the company-specific risk be diversified away by investing in both Alliance Entertainment and Chefs Warehouse 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 Alliance Entertainment and Chefs Warehouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Entertainment Holding and The Chefs Warehouse, you can compare the effects of market volatilities on Alliance Entertainment and Chefs Warehouse 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 Alliance Entertainment with a short position of Chefs Warehouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Entertainment and Chefs Warehouse.
Diversification Opportunities for Alliance Entertainment and Chefs Warehouse
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alliance and Chefs is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Entertainment Holding and The Chefs Warehouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chefs Warehouse and Alliance Entertainment 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 Alliance Entertainment Holding are associated (or correlated) with Chefs Warehouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chefs Warehouse has no effect on the direction of Alliance Entertainment i.e., Alliance Entertainment and Chefs Warehouse go up and down completely randomly.
Pair Corralation between Alliance Entertainment and Chefs Warehouse
Given the investment horizon of 90 days Alliance Entertainment Holding is expected to generate 3.36 times more return on investment than Chefs Warehouse. However, Alliance Entertainment is 3.36 times more volatile than The Chefs Warehouse. It trades about 0.22 of its potential returns per unit of risk. The Chefs Warehouse is currently generating about 0.29 per unit of risk. If you would invest 479.00 in Alliance Entertainment Holding on September 12, 2024 and sell it today you would earn a total of 140.00 from holding Alliance Entertainment Holding or generate 29.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Alliance Entertainment Holding vs. The Chefs Warehouse
Performance |
| Timeline |
| Alliance Entertainment |
| Chefs Warehouse |
Alliance Entertainment and Chefs Warehouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Entertainment and Chefs Warehouse
The main advantage of trading using opposite Alliance Entertainment and Chefs Warehouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Entertainment position performs unexpectedly, Chefs Warehouse 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 Chefs Warehouse will offset losses from the drop in Chefs Warehouse's long position.| Alliance Entertainment vs. Independence Realty Trust | Alliance Entertainment vs. Genfit | Alliance Entertainment vs. Alchemy Investments Acquisition | Alliance Entertainment vs. Inhibrx |
| Chefs Warehouse vs. US Foods Holding | Chefs Warehouse vs. Sysco | Chefs Warehouse vs. SpartanNash Co | Chefs Warehouse vs. Calavo Growers |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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