Correlation Between Cal Maine and TERADATA
Can any of the company-specific risk be diversified away by investing in both Cal Maine and TERADATA 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 TERADATA 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 TERADATA, you can compare the effects of market volatilities on Cal Maine and TERADATA 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 TERADATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and TERADATA.
Diversification Opportunities for Cal Maine and TERADATA
Poor diversification
The 3 months correlation between Cal and TERADATA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA 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 TERADATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TERADATA has no effect on the direction of Cal Maine i.e., Cal Maine and TERADATA go up and down completely randomly.
Pair Corralation between Cal Maine and TERADATA
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 1.07 times more return on investment than TERADATA. However, Cal Maine is 1.07 times more volatile than TERADATA. It trades about 0.09 of its potential returns per unit of risk. TERADATA is currently generating about 0.01 per unit of risk. If you would invest 4,405 in Cal Maine Foods on October 11, 2024 and sell it today you would earn a total of 5,581 from holding Cal Maine Foods or generate 126.7% 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. TERADATA
Performance |
| Timeline |
| Cal Maine Foods |
| TERADATA |
Cal Maine and TERADATA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and TERADATA
The main advantage of trading using opposite Cal Maine and TERADATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, TERADATA 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 TERADATA will offset losses from the drop in TERADATA's long position.| Cal Maine vs. National Beverage Corp | Cal Maine vs. THAI BEVERAGE | Cal Maine vs. Fevertree Drinks PLC | Cal Maine vs. KIMBALL ELECTRONICS |
| TERADATA vs. RCS MediaGroup SpA | TERADATA vs. Flutter Entertainment PLC | TERADATA vs. MEDICAL FACILITIES NEW | TERADATA vs. PULSION Medical Systems |
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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