Correlation Between Cal Maine and Ares Management
Can any of the company-specific risk be diversified away by investing in both Cal Maine and Ares Management 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 and Ares Management 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 Ares Management Corp, you can compare the effects of market volatilities on Cal Maine and Ares Management 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 with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Ares Management.
Diversification Opportunities for Cal Maine and Ares Management
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cal and Ares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp and Cal Maine 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 Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management Corp has no effect on the direction of Cal Maine i.e., Cal Maine and Ares Management go up and down completely randomly.
Pair Corralation between Cal Maine and Ares Management
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 1.69 times more return on investment than Ares Management. However, Cal Maine is 1.69 times more volatile than Ares Management Corp. It trades about 0.07 of its potential returns per unit of risk. Ares Management Corp is currently generating about 0.0 per unit of risk. If you would invest 10,220 in Cal Maine Foods on October 17, 2024 and sell it today you would earn a total of 395.00 from holding Cal Maine Foods or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. Ares Management Corp
Performance |
| Timeline |
| Cal Maine Foods |
| Ares Management Corp |
Cal Maine and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and Ares Management
The main advantage of trading using opposite Cal Maine and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.| Cal Maine vs. Taiwan Semiconductor Manufacturing | Cal Maine vs. ALERION CLEANPOWER | Cal Maine vs. Ultra Clean Holdings | Cal Maine vs. ELMOS SEMICONDUCTOR |
| Ares Management vs. VIVA WINE GROUP | Ares Management vs. ITALIAN WINE BRANDS | Ares Management vs. Cal Maine Foods | Ares Management vs. Astral Foods Limited |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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