Correlation Between Calavo Growers and Chefs Warehouse

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

By analyzing existing cross correlation between Calavo Growers and The Chefs Warehouse, you can compare the effects of market volatilities on Calavo Growers 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 Calavo Growers with a short position of Chefs Warehouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calavo Growers and Chefs Warehouse.

Diversification Opportunities for Calavo Growers and Chefs Warehouse

-0.22

Correlation Coefficient

Calavo Growers  Chefs Warehouse

Very good diversification

The 3 months correlation between Calavo and Chefs is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Calavo Growers and The Chefs Warehouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chefs Warehouse and Calavo Growers 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 Calavo Growers 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 Calavo Growers i.e., Calavo Growers and Chefs Warehouse go up and down completely randomly.

Pair Corralation between Calavo Growers and Chefs Warehouse

Given the investment horizon of 90 days Calavo Growers is expected to under-perform the Chefs Warehouse. In addition to that, Calavo Growers is 1.16 times more volatile than The Chefs Warehouse. It trades about -0.01 of its total potential returns per unit of risk. The Chefs Warehouse is currently generating about 0.07 per unit of volatility. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Calavo Growers  vs.  The Chefs Warehouse

Calavo Growers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calavo Growers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Calavo Growers is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with Calavo Growers and Chefs Warehouse

The main advantage of trading using opposite Calavo Growers and Chefs Warehouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calavo Growers 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 Calavo Growers 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.