Correlation Between CAL-MAINE FOODS and Deere
Can any of the company-specific risk be diversified away by investing in both CAL-MAINE FOODS and Deere 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 FOODS and Deere 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 Deere Company, you can compare the effects of market volatilities on CAL-MAINE FOODS and Deere 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 FOODS with a short position of Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL-MAINE FOODS and Deere.
Diversification Opportunities for CAL-MAINE FOODS and Deere
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CAL-MAINE and Deere is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and CAL-MAINE FOODS 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 Deere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deere Company has no effect on the direction of CAL-MAINE FOODS i.e., CAL-MAINE FOODS and Deere go up and down completely randomly.
Pair Corralation between CAL-MAINE FOODS and Deere
Assuming the 90 days trading horizon CAL-MAINE FOODS is expected to generate 1.36 times less return on investment than Deere. But when comparing it to its historical volatility, CAL MAINE FOODS is 1.58 times less risky than Deere. It trades about 0.35 of its potential returns per unit of risk. Deere Company is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 37,335 in Deere Company on September 1, 2024 and sell it today you would earn a total of 6,745 from holding Deere Company or generate 18.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CAL MAINE FOODS vs. Deere Company
Performance |
| Timeline |
| CAL MAINE FOODS |
| Deere Company |
CAL-MAINE FOODS and Deere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL-MAINE FOODS and Deere
The main advantage of trading using opposite CAL-MAINE FOODS and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL-MAINE FOODS position performs unexpectedly, Deere 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 Deere will offset losses from the drop in Deere's long position.| CAL-MAINE FOODS vs. Gold Road Resources | CAL-MAINE FOODS vs. Transportadora de Gas | CAL-MAINE FOODS vs. GOLD ROAD RES | CAL-MAINE FOODS vs. Air Transport Services |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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