Correlation Between Gladstone Investment and Cal-Maine Foods
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and Cal-Maine Foods 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 Gladstone Investment and Cal-Maine Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and Cal Maine Foods, you can compare the effects of market volatilities on Gladstone Investment and Cal-Maine Foods 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 Gladstone Investment with a short position of Cal-Maine Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Cal-Maine Foods.
Diversification Opportunities for Gladstone Investment and Cal-Maine Foods
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gladstone and Cal-Maine is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Cal Maine Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Maine Foods and Gladstone Investment 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 Gladstone Investment are associated (or correlated) with Cal-Maine Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Maine Foods has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Cal-Maine Foods go up and down completely randomly.
Pair Corralation between Gladstone Investment and Cal-Maine Foods
Assuming the 90 days horizon Gladstone Investment is expected to generate 2.27 times less return on investment than Cal-Maine Foods. But when comparing it to its historical volatility, Gladstone Investment is 1.38 times less risky than Cal-Maine Foods. It trades about 0.07 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,164 in Cal Maine Foods on August 31, 2024 and sell it today you would earn a total of 4,964 from holding Cal Maine Foods or generate 119.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
Gladstone Investment vs. Cal Maine Foods
Performance |
| Timeline |
| Gladstone Investment |
| Cal Maine Foods |
Gladstone Investment and Cal-Maine Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and Cal-Maine Foods
The main advantage of trading using opposite Gladstone Investment and Cal-Maine Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, Cal-Maine Foods 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 Cal-Maine Foods will offset losses from the drop in Cal-Maine Foods' long position.| Gladstone Investment vs. QUEEN S ROAD | Gladstone Investment vs. Air Transport Services | Gladstone Investment vs. Gold Road Resources | Gladstone Investment vs. GOLD ROAD RES |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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