Correlation Between CAL MAINE and Bayer AG
Can any of the company-specific risk be diversified away by investing in both CAL MAINE and Bayer AG 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 Bayer AG 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 Bayer AG NA, you can compare the effects of market volatilities on CAL MAINE and Bayer AG 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 Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and Bayer AG.
Diversification Opportunities for CAL MAINE and Bayer AG
Excellent diversification
The 3 months correlation between CAL and Bayer is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Bayer AG NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG NA 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 Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG NA has no effect on the direction of CAL MAINE i.e., CAL MAINE and Bayer AG go up and down completely randomly.
Pair Corralation between CAL MAINE and Bayer AG
Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 0.7 times more return on investment than Bayer AG. However, CAL MAINE FOODS is 1.43 times less risky than Bayer AG. It trades about 0.33 of its potential returns per unit of risk. Bayer AG NA is currently generating about -0.19 per unit of risk. If you would invest 6,291 in CAL MAINE FOODS on August 29, 2024 and sell it today you would earn a total of 2,853 from holding CAL MAINE FOODS or generate 45.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.92% |
| Values | Daily Returns |
CAL MAINE FOODS vs. Bayer AG NA
Performance |
| Timeline |
| CAL MAINE FOODS |
| Bayer AG NA |
CAL MAINE and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL MAINE and Bayer AG
The main advantage of trading using opposite CAL MAINE and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG'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 |
| Bayer AG vs. CENTURIA OFFICE REIT | Bayer AG vs. Neinor Homes SA | Bayer AG vs. COMMERCIAL VEHICLE | Bayer AG vs. Commercial Vehicle Group |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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