Correlation Between Cal Maine and Air Lease
Can any of the company-specific risk be diversified away by investing in both Cal Maine and Air Lease 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 Air Lease 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 Air Lease, you can compare the effects of market volatilities on Cal Maine and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Air Lease.
Diversification Opportunities for Cal Maine and Air Lease
Poor diversification
The 3 months correlation between Cal and Air is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Cal Maine i.e., Cal Maine and Air Lease go up and down completely randomly.
Pair Corralation between Cal Maine and Air Lease
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 1.49 times more return on investment than Air Lease. However, Cal Maine is 1.49 times more volatile than Air Lease. It trades about 0.23 of its potential returns per unit of risk. Air Lease is currently generating about 0.02 per unit of risk. If you would invest 8,928 in Cal Maine Foods on September 21, 2024 and sell it today you would earn a total of 1,152 from holding Cal Maine Foods or generate 12.9% 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. Air Lease
Performance |
| Timeline |
| Cal Maine Foods |
| Air Lease |
Cal Maine and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and Air Lease
The main advantage of trading using opposite Cal Maine and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Cal Maine vs. WisdomTree Investments | Cal Maine vs. Lion One Metals | Cal Maine vs. DISTRICT METALS | Cal Maine vs. Gladstone Investment |
| Air Lease vs. CAREER EDUCATION | Air Lease vs. Strategic Education | Air Lease vs. TERADATA | Air Lease vs. Grand Canyon Education |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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