Correlation Between Chefs Warehouse and Mission Produce

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

Diversification Opportunities for Chefs Warehouse and Mission Produce

0.04

Correlation Coefficient

Chefs Warehouse  Mission Produce

Significant diversification

The 3 months correlation between Chefs and Mission is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Chefs Warehouse and Mission Produce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mission Produce 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 Mission Produce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mission Produce has no effect on the direction of Chefs Warehouse i.e., Chefs Warehouse and Mission Produce go up and down completely randomly.

Pair Corralation between Chefs Warehouse and Mission Produce

Given the investment horizon of 90 days The Chefs Warehouse is expected to generate 0.93 times more return on investment than Mission Produce. However, The Chefs Warehouse is 1.07 times less risky than Mission Produce. It trades about 0.07 of its potential returns per unit of risk. Mission Produce is currently generating about -0.22 per unit of risk. If you would invest  4,900  in The Chefs Warehouse on December 28, 2024 and sell it today you would earn a total of  447.00  from holding The Chefs Warehouse or generate 9.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Chefs Warehouse  vs.  Mission Produce

Chefs Warehouse

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Chefs Warehouse are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Chefs Warehouse may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mission Produce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mission Produce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Chefs Warehouse and Mission Produce

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

The idea behind The Chefs Warehouse and Mission Produce 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.