Correlation Between Cal-Maine Foods and Laureate Education
Can any of the company-specific risk be diversified away by investing in both Cal-Maine Foods and Laureate Education 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 Laureate Education 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 Laureate Education, you can compare the effects of market volatilities on Cal-Maine Foods and Laureate Education 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 Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal-Maine Foods and Laureate Education.
Diversification Opportunities for Cal-Maine Foods and Laureate Education
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cal-Maine and Laureate is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education 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 Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of Cal-Maine Foods i.e., Cal-Maine Foods and Laureate Education go up and down completely randomly.
Pair Corralation between Cal-Maine Foods and Laureate Education
Assuming the 90 days horizon Cal-Maine Foods is expected to generate 3.2 times less return on investment than Laureate Education. But when comparing it to its historical volatility, Cal Maine Foods is 1.9 times less risky than Laureate Education. It trades about 0.23 of its potential returns per unit of risk. Laureate Education is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,400 in Laureate Education on August 29, 2024 and sell it today you would earn a total of 470.00 from holding Laureate Education or generate 33.57% 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. Laureate Education
Performance |
| Timeline |
| Cal Maine Foods |
| Laureate Education |
Cal-Maine Foods and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal-Maine Foods and Laureate Education
The main advantage of trading using opposite Cal-Maine Foods and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal-Maine Foods position performs unexpectedly, Laureate Education 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| Cal-Maine Foods vs. Superior Plus Corp | Cal-Maine Foods vs. NMI Holdings | Cal-Maine Foods vs. Origin Agritech | Cal-Maine Foods vs. SIVERS SEMICONDUCTORS AB |
| Laureate Education vs. Tower Semiconductor | Laureate Education vs. MTI WIRELESS EDGE | Laureate Education vs. Nordic Semiconductor ASA | Laureate Education vs. ON SEMICONDUCTOR |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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