Correlation Between Chefs Warehouse and AMCON Distributing

Can any of the company-specific risk be diversified away by investing in both Chefs Warehouse and AMCON Distributing 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 AMCON Distributing 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 AMCON Distributing, you can compare the effects of market volatilities on Chefs Warehouse and AMCON Distributing 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 AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chefs Warehouse and AMCON Distributing.

Diversification Opportunities for Chefs Warehouse and AMCON Distributing

0.02

Correlation Coefficient

Chefs Warehouse  AMCON Distributing

Significant diversification

The 3 months correlation between Chefs and AMCON is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding The Chefs Warehouse and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing 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 AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Chefs Warehouse i.e., Chefs Warehouse and AMCON Distributing go up and down completely randomly.

Pair Corralation between Chefs Warehouse and AMCON Distributing

Given the investment horizon of 90 days The Chefs Warehouse is expected to generate 0.69 times more return on investment than AMCON Distributing. However, The Chefs Warehouse is 1.45 times less risky than AMCON Distributing. It trades about 0.04 of its potential returns per unit of risk. AMCON Distributing is currently generating about -0.18 per unit of risk. If you would invest  3,665  in The Chefs Warehouse on February 26, 2024 and sell it today you would earn a total of  155.00  from holding The Chefs Warehouse or generate 4.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

The Chefs Warehouse  vs.  AMCON Distributing

Chefs Warehouse

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Chefs Warehouse are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Chefs Warehouse and AMCON Distributing

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

The idea behind The Chefs Warehouse and AMCON Distributing 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.