Correlation Between Cal-Maine Foods and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Cal-Maine Foods and MGIC INVESTMENT 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 MGIC INVESTMENT 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 MGIC INVESTMENT, you can compare the effects of market volatilities on Cal-Maine Foods and MGIC INVESTMENT 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 MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal-Maine Foods and MGIC INVESTMENT.
Diversification Opportunities for Cal-Maine Foods and MGIC INVESTMENT
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cal-Maine and MGIC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT 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 MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of Cal-Maine Foods i.e., Cal-Maine Foods and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between Cal-Maine Foods and MGIC INVESTMENT
Assuming the 90 days horizon Cal Maine Foods is expected to generate 1.81 times more return on investment than MGIC INVESTMENT. However, Cal-Maine Foods is 1.81 times more volatile than MGIC INVESTMENT. It trades about 0.11 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.13 per unit of risk. If you would invest 4,164 in Cal Maine Foods on August 31, 2024 and sell it today you would earn a total of 4,964 from holding Cal Maine Foods or generate 119.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Cal Maine Foods vs. MGIC INVESTMENT
Performance |
| Timeline |
| Cal Maine Foods |
| MGIC INVESTMENT |
Cal-Maine Foods and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal-Maine Foods and MGIC INVESTMENT
The main advantage of trading using opposite Cal-Maine Foods and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal-Maine Foods position performs unexpectedly, MGIC INVESTMENT 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 MGIC INVESTMENT will offset losses from the drop in MGIC INVESTMENT's 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 |
| MGIC INVESTMENT vs. SIVERS SEMICONDUCTORS AB | MGIC INVESTMENT vs. Darden Restaurants | MGIC INVESTMENT vs. Reliance Steel Aluminum | MGIC INVESTMENT vs. Q2M Managementberatung 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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