Correlation Between Cars and Sysco Corp

Can any of the company-specific risk be diversified away by investing in both Cars and Sysco Corp 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 Cars and Sysco Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cars Inc and Sysco Corp, you can compare the effects of market volatilities on Cars and Sysco Corp 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 Cars with a short position of Sysco Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Sysco Corp.

Diversification Opportunities for Cars and Sysco Corp

0.45

Correlation Coefficient

Cars  Sysco Corp

Very weak diversification

The 3 months correlation between Cars and Sysco is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Sysco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco Corp and Cars 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 Cars Inc are associated (or correlated) with Sysco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco Corp has no effect on the direction of Cars i.e., Cars and Sysco Corp go up and down completely randomly.

Pair Corralation between Cars and Sysco Corp

Assuming the 90 days trading horizon Cars Inc is expected to generate 2.87 times more return on investment than Sysco Corp. However, Cars is 2.87 times more volatile than Sysco Corp. It trades about 0.01 of its potential returns per unit of risk. Sysco Corp is currently generating about 0.02 per unit of risk. If you would invest  1,758  in Cars Inc on September 22, 2024 and sell it today you would lose (12.00) from holding Cars Inc or give up 0.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	65.15%
Values	Daily Returns

Cars Inc  vs.  Sysco Corp

Cars Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cars Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cars is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sysco Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sysco Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sysco Corp is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cars and Sysco Corp

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

The idea behind Cars Inc and Sysco Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.