Correlation Between CAL MAINE and PLATO GOLD
Can any of the company-specific risk be diversified away by investing in both CAL MAINE and PLATO GOLD 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 PLATO GOLD 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 PLATO GOLD P, you can compare the effects of market volatilities on CAL MAINE and PLATO GOLD 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 PLATO GOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and PLATO GOLD.
Diversification Opportunities for CAL MAINE and PLATO GOLD
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CAL and PLATO is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and PLATO GOLD P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLATO GOLD P 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 PLATO GOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLATO GOLD P has no effect on the direction of CAL MAINE i.e., CAL MAINE and PLATO GOLD go up and down completely randomly.
Pair Corralation between CAL MAINE and PLATO GOLD
Assuming the 90 days trading horizon CAL MAINE is expected to generate 10.88 times less return on investment than PLATO GOLD. But when comparing it to its historical volatility, CAL MAINE FOODS is 13.42 times less risky than PLATO GOLD. It trades about 0.13 of its potential returns per unit of risk. PLATO GOLD P is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.35 in PLATO GOLD P on September 12, 2024 and sell it today you would earn a total of 0.65 from holding PLATO GOLD P or generate 185.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAL MAINE FOODS vs. PLATO GOLD P
Performance |
| Timeline |
| CAL MAINE FOODS |
| PLATO GOLD P |
CAL MAINE and PLATO GOLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL MAINE and PLATO GOLD
The main advantage of trading using opposite CAL MAINE and PLATO GOLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE position performs unexpectedly, PLATO GOLD 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 PLATO GOLD will offset losses from the drop in PLATO GOLD's long position.The idea behind CAL MAINE FOODS and PLATO GOLD P pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| PLATO GOLD vs. Elmos Semiconductor SE | PLATO GOLD vs. ELMOS SEMICONDUCTOR | PLATO GOLD vs. National Beverage Corp | PLATO GOLD vs. CAL MAINE FOODS |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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