Correlation Between Cal Maine and Goosehead Insurance
Can any of the company-specific risk be diversified away by investing in both Cal Maine and Goosehead Insurance 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 Goosehead Insurance 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 Goosehead Insurance, you can compare the effects of market volatilities on Cal Maine and Goosehead Insurance 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 Goosehead Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Goosehead Insurance.
Diversification Opportunities for Cal Maine and Goosehead Insurance
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cal and Goosehead is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance 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 Goosehead Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goosehead Insurance has no effect on the direction of Cal Maine i.e., Cal Maine and Goosehead Insurance go up and down completely randomly.
Pair Corralation between Cal Maine and Goosehead Insurance
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 1.35 times more return on investment than Goosehead Insurance. However, Cal Maine is 1.35 times more volatile than Goosehead Insurance. It trades about 0.26 of its potential returns per unit of risk. Goosehead Insurance is currently generating about -0.06 per unit of risk. If you would invest 8,808 in Cal Maine Foods on September 20, 2024 and sell it today you would earn a total of 1,287 from holding Cal Maine Foods or generate 14.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cal Maine Foods vs. Goosehead Insurance
Performance |
| Timeline |
| Cal Maine Foods |
| Goosehead Insurance |
Cal Maine and Goosehead Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and Goosehead Insurance
The main advantage of trading using opposite Cal Maine and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, Goosehead Insurance 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 Goosehead Insurance will offset losses from the drop in Goosehead Insurance's long position.| Cal Maine vs. Consolidated Communications Holdings | Cal Maine vs. HEMISPHERE EGY | Cal Maine vs. MINCO SILVER | Cal Maine vs. Spirent Communications plc |
| Goosehead Insurance vs. Aedas Homes SA | Goosehead Insurance vs. FUYO GENERAL LEASE | Goosehead Insurance vs. MOLSON RS BEVERAGE | Goosehead Insurance vs. Cal Maine Foods |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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