Correlation Between Cal Maine and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both Cal Maine and InPlay Oil 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 InPlay Oil 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 InPlay Oil Corp, you can compare the effects of market volatilities on Cal Maine and InPlay Oil 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 InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and InPlay Oil.
Diversification Opportunities for Cal Maine and InPlay Oil
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cal and InPlay is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Cal Maine i.e., Cal Maine and InPlay Oil go up and down completely randomly.
Pair Corralation between Cal Maine and InPlay Oil
Assuming the 90 days horizon Cal Maine Foods is expected to generate 0.79 times more return on investment than InPlay Oil. However, Cal Maine Foods is 1.27 times less risky than InPlay Oil. It trades about 0.3 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.04 per unit of risk. If you would invest 8,158 in Cal Maine Foods on August 30, 2024 and sell it today you would earn a total of 972.00 from holding Cal Maine Foods or generate 11.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. InPlay Oil Corp
Performance |
| Timeline |
| Cal Maine Foods |
| InPlay Oil Corp |
Cal Maine and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and InPlay Oil
The main advantage of trading using opposite Cal Maine and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.| Cal Maine vs. FORWARD AIR P | Cal Maine vs. Fair Isaac Corp | Cal Maine vs. MI Homes | Cal Maine vs. ANGI Homeservices |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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