Correlation Between Sysco and AMCON Distributing

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

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

Diversification Opportunities for Sysco and AMCON Distributing

0.35

Correlation Coefficient

Sysco  AMCON Distributing

Weak diversification

The 3 months correlation between Sysco and AMCON is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sysco and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing and Sysco 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 Sysco are associated (or correlated) with AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Sysco i.e., Sysco and AMCON Distributing go up and down completely randomly.

Pair Corralation between Sysco and AMCON Distributing

Considering the 90-day investment horizon Sysco is expected to under-perform the AMCON Distributing. But the stock apears to be less risky and, when comparing its historical volatility, Sysco is 3.39 times less risky than AMCON Distributing. The stock trades about -0.02 of its potential returns per unit of risk. The AMCON Distributing is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  14,175  in AMCON Distributing on August 31, 2024 and sell it today you would lose (693.00) from holding AMCON Distributing or give up 4.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Sysco  vs.  AMCON Distributing

Sysco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sysco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sysco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sysco and AMCON Distributing

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

The idea behind Sysco and AMCON Distributing 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.