Correlation Between CAL MAINE and Tokio Marine
Can any of the company-specific risk be diversified away by investing in both CAL MAINE and Tokio Marine 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 Tokio Marine 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 Tokio Marine Holdings, you can compare the effects of market volatilities on CAL MAINE and Tokio Marine 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 Tokio Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and Tokio Marine.
Diversification Opportunities for CAL MAINE and Tokio Marine
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CAL and Tokio is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Tokio Marine Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokio Marine Holdings 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 Tokio Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokio Marine Holdings has no effect on the direction of CAL MAINE i.e., CAL MAINE and Tokio Marine go up and down completely randomly.
Pair Corralation between CAL MAINE and Tokio Marine
Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 0.73 times more return on investment than Tokio Marine. However, CAL MAINE FOODS is 1.38 times less risky than Tokio Marine. It trades about 0.32 of its potential returns per unit of risk. Tokio Marine Holdings is currently generating about 0.15 per unit of risk. If you would invest 8,154 in CAL MAINE FOODS on August 29, 2024 and sell it today you would earn a total of 990.00 from holding CAL MAINE FOODS or generate 12.14% 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. Tokio Marine Holdings
Performance |
| Timeline |
| CAL MAINE FOODS |
| Tokio Marine Holdings |
CAL MAINE and Tokio Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL MAINE and Tokio Marine
The main advantage of trading using opposite CAL MAINE and Tokio Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE position performs unexpectedly, Tokio Marine 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 Tokio Marine will offset losses from the drop in Tokio Marine's long position.The idea behind CAL MAINE FOODS and Tokio Marine Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Tokio Marine vs. AECOM TECHNOLOGY | Tokio Marine vs. Jacquet Metal Service | Tokio Marine vs. FANDIFI TECHNOLOGY P | Tokio Marine vs. Amkor Technology |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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