Correlation Between Cal Maine and Archer Daniels
Can any of the company-specific risk be diversified away by investing in both Cal Maine and Archer Daniels 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 Cal Maine and Archer Daniels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cal Maine Foods and Archer Daniels Midland, you can compare the effects of market volatilities on Cal Maine and Archer Daniels 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 Cal Maine with a short position of Archer Daniels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Archer Daniels.
Diversification Opportunities for Cal Maine and Archer Daniels
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cal and Archer is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland and Cal Maine 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 Cal Maine Foods are associated (or correlated) with Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of Cal Maine i.e., Cal Maine and Archer Daniels go up and down completely randomly.
Pair Corralation between Cal Maine and Archer Daniels
Given the investment horizon of 90 days Cal Maine Foods is expected to generate 0.8 times more return on investment than Archer Daniels. However, Cal Maine Foods is 1.25 times less risky than Archer Daniels. It trades about 0.26 of its potential returns per unit of risk. Archer Daniels Midland is currently generating about -0.18 per unit of risk. 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 |
Cal Maine Foods vs. Archer Daniels Midland
Performance |
| Timeline |
| Cal Maine Foods |
| Archer Daniels Midland |
Cal Maine and Archer Daniels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and Archer Daniels
The main advantage of trading using opposite Cal Maine and Archer Daniels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, Archer Daniels 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 Archer Daniels will offset losses from the drop in Archer Daniels' long position.| Cal Maine vs. Bunge Limited | Cal Maine vs. Tyson Foods | Cal Maine vs. Dole PLC | Cal Maine vs. Adecoagro SA |
| Archer Daniels vs. Adecoagro SA | Archer Daniels vs. Cal Maine Foods | Archer Daniels vs. Tyson Foods | Archer Daniels vs. Fresh Del Monte |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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