Correlation Between CAL MAINE and Dow Jones
Can any of the company-specific risk be diversified away by investing in both CAL MAINE and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on CAL MAINE and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and Dow Jones.
Diversification Opportunities for CAL MAINE and Dow Jones
Average diversification
The 3 months correlation between CAL and Dow is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of CAL MAINE i.e., CAL MAINE and Dow Jones go up and down completely randomly.
Pair Corralation between CAL MAINE and Dow Jones
Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 3.35 times more return on investment than Dow Jones. However, CAL MAINE is 3.35 times more volatile than Dow Jones Industrial. It trades about 0.24 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.33 per unit of risk. If you would invest 9,732 in CAL MAINE FOODS on November 3, 2024 and sell it today you would earn a total of 1,348 from holding CAL MAINE FOODS or generate 13.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
CAL MAINE FOODS vs. Dow Jones Industrial
Performance |
| Timeline |
CAL MAINE and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
CAL MAINE FOODS
Pair trading matchups for CAL MAINE
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with CAL MAINE and Dow Jones
The main advantage of trading using opposite CAL MAINE and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| CAL MAINE vs. Take Two Interactive Software | CAL MAINE vs. ARISTOCRAT LEISURE | CAL MAINE vs. UPDATE SOFTWARE | CAL MAINE vs. PLAYSTUDIOS A DL 0001 |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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