Correlation Between CAL MAINE and Amgen
Can any of the company-specific risk be diversified away by investing in both CAL MAINE and Amgen 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 Amgen 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 Amgen Inc, you can compare the effects of market volatilities on CAL MAINE and Amgen 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 Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and Amgen.
Diversification Opportunities for CAL MAINE and Amgen
Excellent diversification
The 3 months correlation between CAL and Amgen is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of CAL MAINE i.e., CAL MAINE and Amgen go up and down completely randomly.
Pair Corralation between CAL MAINE and Amgen
Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 0.56 times more return on investment than Amgen. However, CAL MAINE FOODS is 1.78 times less risky than Amgen. It trades about 0.31 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.17 per unit of risk. If you would invest 8,154 in CAL MAINE FOODS on August 29, 2024 and sell it today you would earn a total of 990.00 from holding CAL MAINE FOODS or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAL MAINE FOODS vs. Amgen Inc
Performance |
| Timeline |
| CAL MAINE FOODS |
| Amgen Inc |
CAL MAINE and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL MAINE and Amgen
The main advantage of trading using opposite CAL MAINE and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE position performs unexpectedly, Amgen 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 Amgen will offset losses from the drop in Amgen's long position.| CAL MAINE vs. Apple Inc | CAL MAINE vs. Apple Inc | CAL MAINE vs. Superior Plus Corp | CAL MAINE vs. SIVERS SEMICONDUCTORS AB |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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