Correlation Between CAL MAINE and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both CAL MAINE and Deutsche Telekom 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 Deutsche Telekom 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 Deutsche Telekom AG, you can compare the effects of market volatilities on CAL MAINE and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and Deutsche Telekom.
Diversification Opportunities for CAL MAINE and Deutsche Telekom
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CAL and Deutsche is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of CAL MAINE i.e., CAL MAINE and Deutsche Telekom go up and down completely randomly.
Pair Corralation between CAL MAINE and Deutsche Telekom
Assuming the 90 days trading horizon CAL MAINE is expected to generate 6.49 times less return on investment than Deutsche Telekom. In addition to that, CAL MAINE is 2.09 times more volatile than Deutsche Telekom AG. It trades about 0.03 of its total potential returns per unit of risk. Deutsche Telekom AG is currently generating about 0.41 per unit of volatility. If you would invest 2,884 in Deutsche Telekom AG on November 5, 2024 and sell it today you would earn a total of 370.00 from holding Deutsche Telekom AG or generate 12.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAL MAINE FOODS vs. Deutsche Telekom AG
Performance |
| Timeline |
| CAL MAINE FOODS |
| Deutsche Telekom |
CAL MAINE and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL MAINE and Deutsche Telekom
The main advantage of trading using opposite CAL MAINE and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.| CAL MAINE vs. Semiconductor Manufacturing International | CAL MAINE vs. Tower Semiconductor | CAL MAINE vs. Magic Software Enterprises | CAL MAINE vs. Lattice Semiconductor |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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