Correlation Between NEW MILLENNIUM and Cal Maine
Can any of the company-specific risk be diversified away by investing in both NEW MILLENNIUM and Cal Maine 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 NEW MILLENNIUM and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEW MILLENNIUM IRON and Cal Maine Foods, you can compare the effects of market volatilities on NEW MILLENNIUM and Cal Maine 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 NEW MILLENNIUM with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MILLENNIUM and Cal Maine.
Diversification Opportunities for NEW MILLENNIUM and Cal Maine
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between NEW and Cal is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON 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 NEW MILLENNIUM 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 NEW MILLENNIUM IRON are associated (or correlated) with Cal Maine. 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 NEW MILLENNIUM i.e., NEW MILLENNIUM and Cal Maine go up and down completely randomly.
Pair Corralation between NEW MILLENNIUM and Cal Maine
Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to generate 0.75 times more return on investment than Cal Maine. However, NEW MILLENNIUM IRON is 1.33 times less risky than Cal Maine. It trades about 0.04 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.03 per unit of risk. If you would invest 795.00 in NEW MILLENNIUM IRON on October 11, 2024 and sell it today you would earn a total of 10.00 from holding NEW MILLENNIUM IRON or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEW MILLENNIUM IRON vs. Cal Maine Foods
Performance |
| Timeline |
| NEW MILLENNIUM IRON |
| Cal Maine Foods |
NEW MILLENNIUM and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEW MILLENNIUM and Cal Maine
The main advantage of trading using opposite NEW MILLENNIUM and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW MILLENNIUM position performs unexpectedly, Cal Maine 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 will offset losses from the drop in Cal Maine's long position.| NEW MILLENNIUM vs. QINGCI GAMES INC | NEW MILLENNIUM vs. Boyd Gaming | NEW MILLENNIUM vs. UPDATE SOFTWARE | NEW MILLENNIUM vs. Align Technology |
| Cal Maine vs. National Beverage Corp | Cal Maine vs. THAI BEVERAGE | Cal Maine vs. Fevertree Drinks PLC | Cal Maine vs. KIMBALL ELECTRONICS |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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