Correlation Between Innovative Food and Chefs Warehouse

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Can any of the company-specific risk be diversified away by investing in both Innovative Food 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 Innovative Food and Chefs Warehouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Food Hldg and The Chefs Warehouse, you can compare the effects of market volatilities on Innovative Food 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 Innovative Food with a short position of Chefs Warehouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Food and Chefs Warehouse.

Diversification Opportunities for Innovative Food and Chefs Warehouse

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Innovative and Chefs is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Food Hldg and The Chefs Warehouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chefs Warehouse and Innovative Food 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 Innovative Food Hldg 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 Innovative Food i.e., Innovative Food and Chefs Warehouse go up and down completely randomly.

Pair Corralation between Innovative Food and Chefs Warehouse

If you would invest (100.00) in Innovative Food Hldg on December 29, 2023 and sell it today you would earn a total of  100.00  from holding Innovative Food Hldg or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Innovative Food Hldg  vs.  The Chefs Warehouse

 Performance 
       Timeline  
Innovative Food Hldg 

Risk-Adjusted Performance

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OK
Over the last 90 days Innovative Food Hldg has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Innovative Food is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
Chefs Warehouse 

Risk-Adjusted Performance

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Compared to the overall equity markets, risk-adjusted returns on investments in The Chefs Warehouse are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Chefs Warehouse reported solid returns over the last few months and may actually be approaching a breakup point.

Innovative Food and Chefs Warehouse Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Innovative Food and Chefs Warehouse

The main advantage of trading using opposite Innovative Food and Chefs Warehouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Food 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.
The idea behind Innovative Food Hldg and The Chefs Warehouse 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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