Correlation Between Genuine Parts and Chefs Warehouse
Can any of the company-specific risk be diversified away by investing in both Genuine Parts 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 Genuine Parts and Chefs Warehouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genuine Parts Co and The Chefs Warehouse, you can compare the effects of market volatilities on Genuine Parts 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 Genuine Parts with a short position of Chefs Warehouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genuine Parts and Chefs Warehouse.
Diversification Opportunities for Genuine Parts and Chefs Warehouse
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Genuine and Chefs is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and The Chefs Warehouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chefs Warehouse and Genuine Parts 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 Genuine Parts Co 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 Genuine Parts i.e., Genuine Parts and Chefs Warehouse go up and down completely randomly.
Pair Corralation between Genuine Parts and Chefs Warehouse
Considering the 90-day investment horizon Genuine Parts is expected to generate 1.04 times less return on investment than Chefs Warehouse. But when comparing it to its historical volatility, Genuine Parts Co is 1.07 times less risky than Chefs Warehouse. It trades about 0.26 of its potential returns per unit of risk. The Chefs Warehouse is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,999 in The Chefs Warehouse on September 4, 2024 and sell it today you would earn a total of 403.00 from holding The Chefs Warehouse or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genuine Parts Co vs. The Chefs Warehouse
Performance |
| Timeline |
| Genuine Parts |
| Chefs Warehouse |
Genuine Parts and Chefs Warehouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genuine Parts and Chefs Warehouse
The main advantage of trading using opposite Genuine Parts and Chefs Warehouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts 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.| Genuine Parts vs. The Chefs Warehouse | Genuine Parts vs. G Willi Food International | Genuine Parts vs. SpartanNash Co | Genuine Parts 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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