Correlation Between Performance Food and Chefs Warehouse

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

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

Diversification Opportunities for Performance Food and Chefs Warehouse

0.59

Correlation Coefficient

Performance Food  Chefs Warehouse

Very weak diversification

The 3 months correlation between Performance and Chefs is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and The Chefs Warehouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chefs Warehouse and Performance Food 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 Performance Food Group 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 Performance Food i.e., Performance Food and Chefs Warehouse go up and down completely randomly.

Pair Corralation between Performance Food and Chefs Warehouse

Given the investment horizon of 90 days Performance Food Group is expected to generate 0.89 times more return on investment than Chefs Warehouse. However, Performance Food Group is 1.13 times less risky than Chefs Warehouse. It trades about -0.02 of its potential returns per unit of risk. The Chefs Warehouse is currently generating about -0.05 per unit of risk. If you would invest  8,300  in Performance Food Group on January 31, 2025 and sell it today you would lose (234.00) from holding Performance Food Group or give up 2.82% of portfolio value over 90 days.

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

Performance Food Group  vs.  The Chefs Warehouse

Performance Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Performance Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Chefs Warehouse

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Chefs Warehouse are ranked lower than 4 (%) 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 June 2025.

Pair Trading with Performance Food and Chefs Warehouse

The main advantage of trading using opposite Performance Food and Chefs Warehouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food 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 Performance Food Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..