Correlation Between Sysco and Rocky Mountain

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

By analyzing existing cross correlation between Sysco and Rocky Mountain Chocolate, you can compare the effects of market volatilities on Sysco and Rocky Mountain 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 Rocky Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sysco and Rocky Mountain.

Diversification Opportunities for Sysco and Rocky Mountain

0.41

Correlation Coefficient

Sysco  Rocky Mountain

Very weak diversification

The 3 months correlation between Sysco and Rocky is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sysco and Rocky Mountain Chocolate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Chocolate 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 Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Chocolate has no effect on the direction of Sysco i.e., Sysco and Rocky Mountain go up and down completely randomly.

Pair Corralation between Sysco and Rocky Mountain

Considering the 90-day investment horizon Sysco is expected to generate 5.38 times less return on investment than Rocky Mountain. But when comparing it to its historical volatility, Sysco is 4.21 times less risky than Rocky Mountain. It trades about 0.03 of its potential returns per unit of risk. Rocky Mountain Chocolate is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  193.00  in Rocky Mountain Chocolate on October 26, 2024 and sell it today you would earn a total of  12.00  from holding Rocky Mountain Chocolate or generate 6.22% return on investment over 90 days.

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

Sysco  vs.  Rocky Mountain Chocolate

Sysco

Risk-Adjusted Performance

0 of 100

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.

Rocky Mountain Chocolate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rocky Mountain Chocolate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sysco and Rocky Mountain

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

The idea behind Sysco and Rocky Mountain Chocolate 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.