Correlation Between SOFI TECHNOLOGIES and Cal-Maine Foods
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES and Cal Maine Foods, you can compare the effects of market volatilities on SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES with a short position of Cal-Maine Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and Cal-Maine Foods.
Diversification Opportunities for SOFI TECHNOLOGIES and Cal-Maine Foods
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SOFI and Cal-Maine is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and Cal-Maine Foods go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and Cal-Maine Foods
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 2.13 times more return on investment than Cal-Maine Foods. However, SOFI TECHNOLOGIES is 2.13 times more volatile than Cal Maine Foods. It trades about 0.39 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.33 per unit of risk. If you would invest 1,016 in SOFI TECHNOLOGIES on August 25, 2024 and sell it today you would earn a total of 391.00 from holding SOFI TECHNOLOGIES or generate 38.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOFI TECHNOLOGIES vs. Cal Maine Foods
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| Cal Maine Foods |
SOFI TECHNOLOGIES and Cal-Maine Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and Cal-Maine Foods
The main advantage of trading using opposite SOFI TECHNOLOGIES and Cal-Maine Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES 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.| SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc |
| Cal-Maine Foods vs. Superior Plus Corp | Cal-Maine Foods vs. NMI Holdings | Cal-Maine Foods vs. Origin Agritech | Cal-Maine Foods vs. SIVERS SEMICONDUCTORS AB |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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