Correlation Between CAL MAINE and Bank of America
Can any of the company-specific risk be diversified away by investing in both CAL MAINE and Bank of America 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 Bank of America 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 Verizon Communications, you can compare the effects of market volatilities on CAL MAINE and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and Bank of America.
Diversification Opportunities for CAL MAINE and Bank of America
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CAL and Bank is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of CAL MAINE i.e., CAL MAINE and Bank of America go up and down completely randomly.
Pair Corralation between CAL MAINE and Bank of America
Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 1.55 times more return on investment than Bank of America. However, CAL MAINE is 1.55 times more volatile than Verizon Communications. It trades about 0.45 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.49 per unit of risk. If you would invest 7,936 in CAL MAINE FOODS on September 4, 2024 and sell it today you would earn a total of 1,268 from holding CAL MAINE FOODS or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAL MAINE FOODS vs. Verizon Communications
Performance |
| Timeline |
| CAL MAINE FOODS |
| Verizon Communications |
CAL MAINE and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL MAINE and Bank of America
The main advantage of trading using opposite CAL MAINE and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.The idea behind CAL MAINE FOODS and Verizon Communications 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.| Bank of America vs. Lifeway Foods | Bank of America vs. PARKEN Sport Entertainment | Bank of America vs. Flutter Entertainment PLC | Bank of America vs. REMEDY ENTERTAINMENT OYJ |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |