Correlation Between Science Applications and Cal Maine
Can any of the company-specific risk be diversified away by investing in both Science Applications 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 Science Applications and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and Cal Maine Foods, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Cal Maine.
Diversification Opportunities for Science Applications and Cal Maine
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Science and Cal is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati 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 Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and Cal Maine go up and down completely randomly.
Pair Corralation between Science Applications and Cal Maine
Assuming the 90 days trading horizon Science Applications International is expected to under-perform the Cal Maine. In addition to that, Science Applications is 1.2 times more volatile than Cal Maine Foods. It trades about -0.01 of its total potential returns per unit of risk. Cal Maine Foods is currently generating about 0.23 per unit of volatility. If you would invest 5,108 in Cal Maine Foods on September 3, 2024 and sell it today you would earn a total of 4,032 from holding Cal Maine Foods or generate 78.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. Cal Maine Foods
Performance |
| Timeline |
| Science Applications |
| Cal Maine Foods |
Science Applications and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and Cal Maine
The main advantage of trading using opposite Science Applications and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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.| Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc |
| Cal Maine vs. ADRIATIC METALS LS 013355 | Cal Maine vs. Datang International Power | Cal Maine vs. Science Applications International | Cal Maine vs. Harmony Gold Mining |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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