Correlation Between CAL-MAINE FOODS and ESSILORLUXOTTICA
Can any of the company-specific risk be diversified away by investing in both CAL-MAINE FOODS and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on CAL-MAINE FOODS and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL-MAINE FOODS and ESSILORLUXOTTICA.
Diversification Opportunities for CAL-MAINE FOODS and ESSILORLUXOTTICA
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CAL-MAINE and ESSILORLUXOTTICA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of CAL-MAINE FOODS i.e., CAL-MAINE FOODS and ESSILORLUXOTTICA go up and down completely randomly.
Pair Corralation between CAL-MAINE FOODS and ESSILORLUXOTTICA
Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 2.42 times more return on investment than ESSILORLUXOTTICA. However, CAL-MAINE FOODS is 2.42 times more volatile than ESSILORLUXOTTICA 12ON. It trades about 0.3 of its potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.06 per unit of risk. If you would invest 9,130 in CAL MAINE FOODS on October 7, 2024 and sell it today you would earn a total of 1,080 from holding CAL MAINE FOODS or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAL MAINE FOODS vs. ESSILORLUXOTTICA 12ON
Performance |
| Timeline |
| CAL MAINE FOODS |
| ESSILORLUXOTTICA 12ON |
CAL-MAINE FOODS and ESSILORLUXOTTICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL-MAINE FOODS and ESSILORLUXOTTICA
The main advantage of trading using opposite CAL-MAINE FOODS and ESSILORLUXOTTICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL-MAINE FOODS position performs unexpectedly, ESSILORLUXOTTICA 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 ESSILORLUXOTTICA will offset losses from the drop in ESSILORLUXOTTICA's long position.| CAL-MAINE FOODS vs. CHINA EDUCATION GROUP | CAL-MAINE FOODS vs. CDL INVESTMENT | CAL-MAINE FOODS vs. STRAYER EDUCATION | CAL-MAINE FOODS vs. AGNC INVESTMENT |
| ESSILORLUXOTTICA vs. The Trade Desk | ESSILORLUXOTTICA vs. VIENNA INSURANCE GR | ESSILORLUXOTTICA vs. AUTO TRADER ADR | ESSILORLUXOTTICA vs. ZURICH INSURANCE 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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