Correlation Between Target and Sysco

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

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

Diversification Opportunities for Target and Sysco

0.17

Correlation Coefficient

Target  Sysco

Average diversification

The 3 months correlation between Target and Sysco is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Target and Sysco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco and Target 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 Target 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 Target i.e., Target and Sysco go up and down completely randomly.

Pair Corralation between Target and Sysco

Considering the 90-day investment horizon Target is expected to under-perform the Sysco. In addition to that, Target is 1.01 times more volatile than Sysco. It trades about -0.18 of its total potential returns per unit of risk. Sysco is currently generating about -0.16 per unit of volatility. If you would invest  8,039  in Sysco on January 26, 2024 and sell it today you would lose (310.00) from holding Sysco or give up 3.86% of portfolio value over 90 days.

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

Target  vs.  Sysco

Target

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Target are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Target unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Target and Sysco

The main advantage of trading using opposite Target and Sysco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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 Target 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.