Correlation Between Target and Chefs Warehouse
Can any of the company-specific risk be diversified away by investing in both Target 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 Target and Chefs Warehouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target and The Chefs Warehouse, you can compare the effects of market volatilities on Target 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 Target with a short position of Chefs Warehouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and Chefs Warehouse.
Diversification Opportunities for Target and Chefs Warehouse
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Target and Chefs is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Target and The Chefs Warehouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chefs Warehouse and Target 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 Target 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 Target i.e., Target and Chefs Warehouse go up and down completely randomly.
Pair Corralation between Target and Chefs Warehouse
Considering the 90-day investment horizon Target is expected to under-perform the Chefs Warehouse. In addition to that, Target is 1.61 times more volatile than The Chefs Warehouse. It trades about -0.07 of its total potential returns per unit of risk. The Chefs Warehouse is currently generating about 0.06 per unit of volatility. If you would invest 4,219 in The Chefs Warehouse on August 28, 2024 and sell it today you would earn a total of 276.00 from holding The Chefs Warehouse or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target vs. The Chefs Warehouse
Performance |
| Timeline |
| Target |
| Chefs Warehouse |
Target and Chefs Warehouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target and Chefs Warehouse
The main advantage of trading using opposite Target and Chefs Warehouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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.| Target vs. Costco Wholesale Corp | Target vs. BJs Wholesale Club | Target vs. Dollar Tree | Target vs. Dollar General |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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