Correlation Between Krispy Kreme and Sysco

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

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

Diversification Opportunities for Krispy Kreme and Sysco

-0.54

Correlation Coefficient

Krispy Kreme  Sysco

Excellent diversification

The 3 months correlation between Krispy and Sysco is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme and Sysco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco and Krispy Kreme 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 Krispy Kreme are associated (or correlated) with Sysco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco has no effect on the direction of Krispy Kreme i.e., Krispy Kreme and Sysco go up and down completely randomly.

Pair Corralation between Krispy Kreme and Sysco

Given the investment horizon of 90 days Krispy Kreme is expected to under-perform the Sysco. In addition to that, Krispy Kreme is 1.77 times more volatile than Sysco. It trades about -0.16 of its total potential returns per unit of risk. Sysco is currently generating about 0.03 per unit of volatility. If you would invest  7,567  in Sysco on September 23, 2024 and sell it today you would earn a total of  130.00  from holding Sysco or generate 1.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Krispy Kreme  vs.  Sysco

Krispy Kreme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Krispy Kreme has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sysco

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sysco are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Sysco is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Krispy Kreme and Sysco

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

The idea behind Krispy Kreme and Sysco 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.