Correlation Between Chefs Warehouse and Genuine Parts
Can any of the company-specific risk be diversified away by investing in both Chefs Warehouse and Genuine Parts 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 Genuine Parts 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 Genuine Parts Co, you can compare the effects of market volatilities on Chefs Warehouse and Genuine Parts 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 Genuine Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chefs Warehouse and Genuine Parts.
Diversification Opportunities for Chefs Warehouse and Genuine Parts
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chefs and Genuine is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding The Chefs Warehouse and Genuine Parts Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of Chefs Warehouse i.e., Chefs Warehouse and Genuine Parts go up and down completely randomly.
Pair Corralation between Chefs Warehouse and Genuine Parts
Given the investment horizon of 90 days The Chefs Warehouse is expected to generate 0.64 times more return on investment than Genuine Parts. However, The Chefs Warehouse is 1.55 times less risky than Genuine Parts. It trades about 0.17 of its potential returns per unit of risk. Genuine Parts Co is currently generating about -0.03 per unit of risk. If you would invest 3,985 in The Chefs Warehouse on September 12, 2024 and sell it today you would earn a total of 881.00 from holding The Chefs Warehouse or generate 22.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Chefs Warehouse vs. Genuine Parts Co
Performance |
| Timeline |
| Chefs Warehouse |
| Genuine Parts |
Chefs Warehouse and Genuine Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chefs Warehouse and Genuine Parts
The main advantage of trading using opposite Chefs Warehouse and Genuine Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chefs Warehouse position performs unexpectedly, Genuine Parts 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 Genuine Parts will offset losses from the drop in Genuine Parts' long position.| Chefs Warehouse vs. US Foods Holding | Chefs Warehouse vs. Sysco | Chefs Warehouse vs. SpartanNash Co | Chefs Warehouse vs. Calavo Growers |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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