Correlation Between Cal-Maine Foods and AUSTEVOLL SEAFOOD
Can any of the company-specific risk be diversified away by investing in both Cal-Maine Foods and AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD, you can compare the effects of market volatilities on Cal-Maine Foods and AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal-Maine Foods and AUSTEVOLL SEAFOOD.
Diversification Opportunities for Cal-Maine Foods and AUSTEVOLL SEAFOOD
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cal-Maine and AUSTEVOLL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and AUSTEVOLL SEAFOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUSTEVOLL SEAFOOD has no effect on the direction of Cal-Maine Foods i.e., Cal-Maine Foods and AUSTEVOLL SEAFOOD go up and down completely randomly.
Pair Corralation between Cal-Maine Foods and AUSTEVOLL SEAFOOD
Assuming the 90 days horizon Cal Maine Foods is expected to generate 1.1 times more return on investment than AUSTEVOLL SEAFOOD. However, Cal-Maine Foods is 1.1 times more volatile than AUSTEVOLL SEAFOOD. It trades about 0.33 of its potential returns per unit of risk. AUSTEVOLL SEAFOOD is currently generating about 0.08 per unit of risk. If you would invest 8,008 in Cal Maine Foods on August 25, 2024 and sell it today you would earn a total of 1,116 from holding Cal Maine Foods or generate 13.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. AUSTEVOLL SEAFOOD
Performance |
| Timeline |
| Cal Maine Foods |
| AUSTEVOLL SEAFOOD |
Cal-Maine Foods and AUSTEVOLL SEAFOOD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal-Maine Foods and AUSTEVOLL SEAFOOD
The main advantage of trading using opposite Cal-Maine Foods and AUSTEVOLL SEAFOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal-Maine Foods position performs unexpectedly, AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD will offset losses from the drop in AUSTEVOLL SEAFOOD'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 |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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