Correlation Between Cal-Maine Foods and Schlumberger
Can any of the company-specific risk be diversified away by investing in both Cal-Maine Foods and Schlumberger 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 Schlumberger 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 Schlumberger Limited, you can compare the effects of market volatilities on Cal-Maine Foods and Schlumberger 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 Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal-Maine Foods and Schlumberger.
Diversification Opportunities for Cal-Maine Foods and Schlumberger
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cal-Maine and Schlumberger is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Schlumberger Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger Limited 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger Limited has no effect on the direction of Cal-Maine Foods i.e., Cal-Maine Foods and Schlumberger go up and down completely randomly.
Pair Corralation between Cal-Maine Foods and Schlumberger
Assuming the 90 days horizon Cal Maine Foods is expected to generate 0.59 times more return on investment than Schlumberger. However, Cal Maine Foods is 1.69 times less risky than Schlumberger. It trades about 0.32 of its potential returns per unit of risk. Schlumberger Limited is currently generating about 0.19 per unit of risk. If you would invest 8,084 in Cal Maine Foods on September 1, 2024 and sell it today you would earn a total of 1,044 from holding Cal Maine Foods or generate 12.91% 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. Schlumberger Limited
Performance |
| Timeline |
| Cal Maine Foods |
| Schlumberger Limited |
Cal-Maine Foods and Schlumberger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal-Maine Foods and Schlumberger
The main advantage of trading using opposite Cal-Maine Foods and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal-Maine Foods position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.| Cal-Maine Foods vs. Gamma Communications plc | Cal-Maine Foods vs. Cogent Communications Holdings | Cal-Maine Foods vs. Entravision Communications | Cal-Maine Foods vs. Highlight Communications AG |
| Schlumberger vs. Halliburton | Schlumberger vs. Tenaris SA | Schlumberger vs. Superior Plus Corp | Schlumberger vs. NMI Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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