Correlation Between Cal Maine and BII Railway
Can any of the company-specific risk be diversified away by investing in both Cal Maine and BII Railway 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 BII Railway 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 BII Railway Transportation, you can compare the effects of market volatilities on Cal Maine and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and BII Railway.
Diversification Opportunities for Cal Maine and BII Railway
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cal and BII is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Cal Maine i.e., Cal Maine and BII Railway go up and down completely randomly.
Pair Corralation between Cal Maine and BII Railway
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 0.75 times more return on investment than BII Railway. However, Cal Maine Foods is 1.33 times less risky than BII Railway. It trades about 0.23 of its potential returns per unit of risk. BII Railway Transportation is currently generating about -0.03 per unit of risk. If you would invest 5,292 in Cal Maine Foods on October 17, 2024 and sell it today you would earn a total of 5,328 from holding Cal Maine Foods or generate 100.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.32% |
| Values | Daily Returns |
Cal Maine Foods vs. BII Railway Transportation
Performance |
| Timeline |
| Cal Maine Foods |
| BII Railway Transpor |
Cal Maine and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and BII Railway
The main advantage of trading using opposite Cal Maine and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Cal Maine vs. Taiwan Semiconductor Manufacturing | Cal Maine vs. ALERION CLEANPOWER | Cal Maine vs. Ultra Clean Holdings | Cal Maine vs. ELMOS SEMICONDUCTOR |
| BII Railway vs. GWILLI FOOD | BII Railway vs. INDOFOOD AGRI RES | BII Railway vs. Cal Maine Foods | BII Railway vs. COFCO Joycome 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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