Correlation Between CAL MAINE and Avanos Medical
Can any of the company-specific risk be diversified away by investing in both CAL MAINE and Avanos Medical 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 Avanos Medical 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 Avanos Medical, you can compare the effects of market volatilities on CAL MAINE and Avanos Medical 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 Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and Avanos Medical.
Diversification Opportunities for CAL MAINE and Avanos Medical
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CAL and Avanos is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical 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 Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of CAL MAINE i.e., CAL MAINE and Avanos Medical go up and down completely randomly.
Pair Corralation between CAL MAINE and Avanos Medical
Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 0.61 times more return on investment than Avanos Medical. However, CAL MAINE FOODS is 1.63 times less risky than Avanos Medical. It trades about 0.32 of its potential returns per unit of risk. Avanos Medical is currently generating about -0.08 per unit of risk. If you would invest 6,365 in CAL MAINE FOODS on September 3, 2024 and sell it today you would earn a total of 2,775 from holding CAL MAINE FOODS or generate 43.6% 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. Avanos Medical
Performance |
| Timeline |
| CAL MAINE FOODS |
| Avanos Medical |
CAL MAINE and Avanos Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL MAINE and Avanos Medical
The main advantage of trading using opposite CAL MAINE and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE position performs unexpectedly, Avanos Medical 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.| CAL MAINE vs. LG Display Co | CAL MAINE vs. USWE SPORTS AB | CAL MAINE vs. SINGAPORE AIRLINES | CAL MAINE vs. VIAPLAY GROUP AB |
| Avanos Medical vs. Lifeway Foods | Avanos Medical vs. DEVRY EDUCATION GRP | Avanos Medical vs. CAL MAINE FOODS | Avanos Medical vs. Xinhua Winshare Publishing |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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