Correlation Between Cal Maine and Edible Garden
Can any of the company-specific risk be diversified away by investing in both Cal Maine and Edible Garden 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 Edible Garden 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 Edible Garden AG, you can compare the effects of market volatilities on Cal Maine and Edible Garden 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 Edible Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Edible Garden.
Diversification Opportunities for Cal Maine and Edible Garden
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cal and Edible is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Edible Garden AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edible Garden AG 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 Edible Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edible Garden AG has no effect on the direction of Cal Maine i.e., Cal Maine and Edible Garden go up and down completely randomly.
Pair Corralation between Cal Maine and Edible Garden
Given the investment horizon of 90 days Cal Maine Foods is expected to generate 0.17 times more return on investment than Edible Garden. However, Cal Maine Foods is 5.88 times less risky than Edible Garden. It trades about 0.28 of its potential returns per unit of risk. Edible Garden AG is currently generating about -0.1 per unit of risk. If you would invest 8,914 in Cal Maine Foods on August 28, 2024 and sell it today you would earn a total of 735.00 from holding Cal Maine Foods or generate 8.25% 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. Edible Garden AG
Performance |
| Timeline |
| Cal Maine Foods |
| Edible Garden AG |
Cal Maine and Edible Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and Edible Garden
The main advantage of trading using opposite Cal Maine and Edible Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, Edible Garden 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 Edible Garden will offset losses from the drop in Edible Garden's long position.| Cal Maine vs. Bunge Limited | Cal Maine vs. Tyson Foods | Cal Maine vs. Dole PLC | Cal Maine vs. Adecoagro SA |
| Edible Garden vs. Golden Agri Resources | Edible Garden vs. Vital Farms | Edible Garden vs. Local Bounti Corp | Edible Garden 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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