Correlation Between Sysco and Spectrum Brands

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

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

Diversification Opportunities for Sysco and Spectrum Brands

0.45

Correlation Coefficient

Sysco  Spectrum Brands

Very weak diversification

The 3 months correlation between Sysco and Spectrum is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sysco and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings 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 Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of Sysco i.e., Sysco and Spectrum Brands go up and down completely randomly.

Pair Corralation between Sysco and Spectrum Brands

Considering the 90-day investment horizon Sysco is expected to generate 0.89 times more return on investment than Spectrum Brands. However, Sysco is 1.13 times less risky than Spectrum Brands. It trades about -0.15 of its potential returns per unit of risk. Spectrum Brands Holdings is currently generating about -0.29 per unit of risk. If you would invest  8,037  in Sysco on January 25, 2024 and sell it today you would lose (287.00) from holding Sysco or give up 3.57% of portfolio value over 90 days.

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

Sysco  vs.  Spectrum Brands Holdings

Sysco

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sysco are ranked lower than 3 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Spectrum Brands Holdings

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Sysco and Spectrum Brands

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

The idea behind Sysco and Spectrum Brands Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.