Correlation Between Cal Maine and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both Cal Maine and CDN IMPERIAL 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 CDN IMPERIAL 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 CDN IMPERIAL BANK, you can compare the effects of market volatilities on Cal Maine and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and CDN IMPERIAL.
Diversification Opportunities for Cal Maine and CDN IMPERIAL
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cal and CDN is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of Cal Maine i.e., Cal Maine and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between Cal Maine and CDN IMPERIAL
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 2.23 times more return on investment than CDN IMPERIAL. However, Cal Maine is 2.23 times more volatile than CDN IMPERIAL BANK. It trades about 0.04 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about -0.16 per unit of risk. If you would invest 10,225 in Cal Maine Foods on November 6, 2024 and sell it today you would earn a total of 165.00 from holding Cal Maine Foods or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| Cal Maine Foods |
| CDN IMPERIAL BANK |
Cal Maine and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and CDN IMPERIAL
The main advantage of trading using opposite Cal Maine and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| Cal Maine vs. US FOODS HOLDING | Cal Maine vs. CSSC Offshore Marine | Cal Maine vs. BRIT AMER TOBACCO | Cal Maine vs. British American Tobacco |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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