Correlation Between CAL MAINE and Brookdale Senior
Can any of the company-specific risk be diversified away by investing in both CAL MAINE and Brookdale Senior 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 Brookdale Senior 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 Brookdale Senior Living, you can compare the effects of market volatilities on CAL MAINE and Brookdale Senior 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 Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and Brookdale Senior.
Diversification Opportunities for CAL MAINE and Brookdale Senior
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CAL and Brookdale is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Brookdale Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookdale Senior Living 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 Brookdale Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookdale Senior Living has no effect on the direction of CAL MAINE i.e., CAL MAINE and Brookdale Senior go up and down completely randomly.
Pair Corralation between CAL MAINE and Brookdale Senior
Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 0.58 times more return on investment than Brookdale Senior. However, CAL MAINE FOODS is 1.73 times less risky than Brookdale Senior. It trades about 0.4 of its potential returns per unit of risk. Brookdale Senior Living is currently generating about -0.06 per unit of risk. If you would invest 6,536 in CAL MAINE FOODS on August 30, 2024 and sell it today you would earn a total of 2,614 from holding CAL MAINE FOODS or generate 39.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
CAL MAINE FOODS vs. Brookdale Senior Living
Performance |
| Timeline |
| CAL MAINE FOODS |
| Brookdale Senior Living |
CAL MAINE and Brookdale Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL MAINE and Brookdale Senior
The main advantage of trading using opposite CAL MAINE and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE position performs unexpectedly, Brookdale Senior 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 Brookdale Senior will offset losses from the drop in Brookdale Senior's long position.| CAL MAINE vs. MGIC INVESTMENT | CAL MAINE vs. Strategic Investments AS | CAL MAINE vs. Virtus Investment Partners | CAL MAINE vs. CHIBA BANK |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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