Correlation Between Cal-Maine Foods and Cal Maine
Can any of the company-specific risk be diversified away by investing in both Cal-Maine Foods and Cal Maine 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 Cal Maine 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 Cal Maine Foods, you can compare the effects of market volatilities on Cal-Maine Foods and Cal Maine 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 Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal-Maine Foods and Cal Maine.
Diversification Opportunities for Cal-Maine Foods and Cal Maine
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cal-Maine and Cal is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Cal Maine Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Maine Foods 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 Cal Maine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Maine Foods has no effect on the direction of Cal-Maine Foods i.e., Cal-Maine Foods and Cal Maine go up and down completely randomly.
Pair Corralation between Cal-Maine Foods and Cal Maine
Assuming the 90 days horizon Cal Maine Foods is expected to generate 0.85 times more return on investment than Cal Maine. However, Cal Maine Foods is 1.18 times less risky than Cal Maine. It trades about 0.18 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.06 per unit of risk. If you would invest 9,736 in Cal Maine Foods on November 3, 2024 and sell it today you would earn a total of 994.00 from holding Cal Maine Foods or generate 10.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cal Maine Foods vs. Cal Maine Foods
Performance |
| Timeline |
| Cal Maine Foods |
| Cal Maine Foods |
Cal-Maine Foods and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal-Maine Foods and Cal Maine
The main advantage of trading using opposite Cal-Maine Foods and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal-Maine Foods position performs unexpectedly, Cal Maine 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 Cal Maine will offset losses from the drop in Cal Maine's long position.| Cal-Maine Foods vs. LOANDEPOT INC A | Cal-Maine Foods vs. WILLIS LEASE FIN | Cal-Maine Foods vs. EEDUCATION ALBERT AB | Cal-Maine Foods vs. FUYO GENERAL LEASE |
| Cal Maine vs. VITEC SOFTWARE GROUP | Cal Maine vs. Guidewire Software | Cal Maine vs. Check Point Software | Cal Maine vs. USU Software AG |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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