Correlation Between CAL-MAINE FOODS and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both CAL-MAINE FOODS and Singapore Airlines 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 Singapore Airlines 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 Singapore Airlines Limited, you can compare the effects of market volatilities on CAL-MAINE FOODS and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL-MAINE FOODS and Singapore Airlines.
Diversification Opportunities for CAL-MAINE FOODS and Singapore Airlines
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between CAL-MAINE and Singapore is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of CAL-MAINE FOODS i.e., CAL-MAINE FOODS and Singapore Airlines go up and down completely randomly.
Pair Corralation between CAL-MAINE FOODS and Singapore Airlines
Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 1.21 times more return on investment than Singapore Airlines. However, CAL-MAINE FOODS is 1.21 times more volatile than Singapore Airlines Limited. It trades about 0.28 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.09 per unit of risk. If you would invest 8,276 in CAL MAINE FOODS on August 31, 2024 and sell it today you would earn a total of 876.00 from holding CAL MAINE FOODS or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAL MAINE FOODS vs. Singapore Airlines Limited
Performance |
| Timeline |
| CAL MAINE FOODS |
| Singapore Airlines |
CAL-MAINE FOODS and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL-MAINE FOODS and Singapore Airlines
The main advantage of trading using opposite CAL-MAINE FOODS and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL-MAINE FOODS position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| CAL-MAINE FOODS vs. Verizon Communications | CAL-MAINE FOODS vs. Spirent Communications plc | CAL-MAINE FOODS vs. WillScot Mobile Mini | CAL-MAINE FOODS vs. Calibre Mining Corp |
| Singapore Airlines vs. RYANAIR HLDGS ADR | Singapore Airlines vs. Southwest Airlines Co | Singapore Airlines vs. Superior Plus Corp | Singapore Airlines vs. NMI Holdings |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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