Correlation Between Archer Daniels and Cal Maine
Can any of the company-specific risk be diversified away by investing in both Archer Daniels 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 Archer Daniels and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Daniels Midland and Cal Maine Foods, you can compare the effects of market volatilities on Archer Daniels 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 Archer Daniels with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Daniels and Cal Maine.
Diversification Opportunities for Archer Daniels and Cal Maine
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Archer and Cal is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland 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 Archer Daniels 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 Archer Daniels Midland 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 Archer Daniels i.e., Archer Daniels and Cal Maine go up and down completely randomly.
Pair Corralation between Archer Daniels and Cal Maine
Considering the 90-day investment horizon Archer Daniels Midland is expected to under-perform the Cal Maine. In addition to that, Archer Daniels is 1.25 times more volatile than Cal Maine Foods. It trades about -0.18 of its total potential returns per unit of risk. Cal Maine Foods is currently generating about 0.26 per unit of volatility. If you would invest 8,914 in Cal Maine Foods on August 27, 2024 and sell it today you would earn a total of 682.00 from holding Cal Maine Foods or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Archer Daniels Midland vs. Cal Maine Foods
Performance |
| Timeline |
| Archer Daniels Midland |
| Cal Maine Foods |
Archer Daniels and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archer Daniels and Cal Maine
The main advantage of trading using opposite Archer Daniels and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Daniels 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.| Archer Daniels vs. Adecoagro SA | Archer Daniels vs. Cal Maine Foods | Archer Daniels vs. Tyson Foods | Archer Daniels vs. Fresh Del Monte |
| Cal Maine vs. Bunge Limited | Cal Maine vs. Tyson Foods | Cal Maine vs. Dole PLC | Cal Maine vs. Adecoagro SA |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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