Correlation Between Spirent Communications and CAL-MAINE FOODS
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications 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 Spirent Communications plc and CAL MAINE FOODS, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of CAL-MAINE FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and CAL-MAINE FOODS.
Diversification Opportunities for Spirent Communications and CAL-MAINE FOODS
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Spirent and CAL-MAINE is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc 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 Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and CAL-MAINE FOODS go up and down completely randomly.
Pair Corralation between Spirent Communications and CAL-MAINE FOODS
Assuming the 90 days horizon Spirent Communications plc is expected to under-perform the CAL-MAINE FOODS. But the stock apears to be less risky and, when comparing its historical volatility, Spirent Communications plc is 1.91 times less risky than CAL-MAINE FOODS. The stock trades about -0.01 of its potential returns per unit of risk. The CAL MAINE FOODS is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 6,372 in CAL MAINE FOODS on September 2, 2024 and sell it today you would earn a total of 2,768 from holding CAL MAINE FOODS or generate 43.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. CAL MAINE FOODS
Performance |
| Timeline |
| Spirent Communications |
| CAL MAINE FOODS |
Spirent Communications and CAL-MAINE FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and CAL-MAINE FOODS
The main advantage of trading using opposite Spirent Communications and CAL-MAINE FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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's long position.| Spirent Communications vs. Deutsche Telekom AG | Spirent Communications vs. Superior Plus Corp | Spirent Communications vs. NMI Holdings | Spirent Communications vs. Origin Agritech |
| CAL-MAINE FOODS vs. SIVERS SEMICONDUCTORS AB | CAL-MAINE FOODS vs. Darden Restaurants | CAL-MAINE FOODS vs. Reliance Steel Aluminum | CAL-MAINE FOODS vs. Q2M Managementberatung AG |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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