Correlation Between Cal-Maine Foods and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Cal-Maine Foods and Lifeway Foods 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 Lifeway Foods 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 Lifeway Foods, you can compare the effects of market volatilities on Cal-Maine Foods and Lifeway Foods 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 Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal-Maine Foods and Lifeway Foods.
Diversification Opportunities for Cal-Maine Foods and Lifeway Foods
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cal-Maine and Lifeway is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Cal-Maine Foods i.e., Cal-Maine Foods and Lifeway Foods go up and down completely randomly.
Pair Corralation between Cal-Maine Foods and Lifeway Foods
Assuming the 90 days horizon Cal-Maine Foods is expected to generate 2.29 times less return on investment than Lifeway Foods. But when comparing it to its historical volatility, Cal Maine Foods is 2.63 times less risky than Lifeway Foods. It trades about 0.11 of its potential returns per unit of risk. Lifeway Foods is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 555.00 in Lifeway Foods on August 31, 2024 and sell it today you would earn a total of 1,785 from holding Lifeway Foods or generate 321.62% 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. Lifeway Foods
Performance |
| Timeline |
| Cal Maine Foods |
| Lifeway Foods |
Cal-Maine Foods and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal-Maine Foods and Lifeway Foods
The main advantage of trading using opposite Cal-Maine Foods and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal-Maine Foods position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| Cal-Maine Foods vs. PICKN PAY STORES | Cal-Maine Foods vs. GungHo Online Entertainment | Cal-Maine Foods vs. SPARTAN STORES | Cal-Maine Foods vs. GALENA MINING LTD |
| Lifeway Foods vs. Danone SA | Lifeway Foods vs. Superior Plus Corp | Lifeway Foods vs. NMI Holdings | Lifeway Foods vs. Origin Agritech |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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