Correlation Between Cal Maine and HYATT HOTELS
Can any of the company-specific risk be diversified away by investing in both Cal Maine and HYATT HOTELS 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 HYATT HOTELS 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 HYATT HOTELS A, you can compare the effects of market volatilities on Cal Maine and HYATT HOTELS 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 HYATT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and HYATT HOTELS.
Diversification Opportunities for Cal Maine and HYATT HOTELS
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cal and HYATT is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A 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 HYATT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYATT HOTELS A has no effect on the direction of Cal Maine i.e., Cal Maine and HYATT HOTELS go up and down completely randomly.
Pair Corralation between Cal Maine and HYATT HOTELS
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 0.75 times more return on investment than HYATT HOTELS. However, Cal Maine Foods is 1.34 times less risky than HYATT HOTELS. It trades about 0.5 of its potential returns per unit of risk. HYATT HOTELS A is currently generating about 0.31 per unit of risk. If you would invest 7,984 in Cal Maine Foods on September 4, 2024 and sell it today you would earn a total of 1,334 from holding Cal Maine Foods or generate 16.71% 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. HYATT HOTELS A
Performance |
| Timeline |
| Cal Maine Foods |
| HYATT HOTELS A |
Cal Maine and HYATT HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and HYATT HOTELS
The main advantage of trading using opposite Cal Maine and HYATT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, HYATT HOTELS 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 HYATT HOTELS will offset losses from the drop in HYATT HOTELS's long position.The idea behind Cal Maine Foods and HYATT HOTELS A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| HYATT HOTELS vs. TOTAL GABON | HYATT HOTELS vs. Walgreens Boots Alliance | HYATT HOTELS vs. Peak Resources 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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