Correlation Between Cal Maine and United Breweries
Can any of the company-specific risk be diversified away by investing in both Cal Maine and United Breweries 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 United Breweries 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 United Breweries Co, you can compare the effects of market volatilities on Cal Maine and United Breweries 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 United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and United Breweries.
Diversification Opportunities for Cal Maine and United Breweries
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cal and United is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries 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 United Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Breweries has no effect on the direction of Cal Maine i.e., Cal Maine and United Breweries go up and down completely randomly.
Pair Corralation between Cal Maine and United Breweries
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 2.15 times more return on investment than United Breweries. However, Cal Maine is 2.15 times more volatile than United Breweries Co. It trades about 0.19 of its potential returns per unit of risk. United Breweries Co is currently generating about 0.01 per unit of risk. If you would invest 10,080 in Cal Maine Foods on October 20, 2024 and sell it today you would earn a total of 1,085 from holding Cal Maine Foods or generate 10.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. United Breweries Co
Performance |
| Timeline |
| Cal Maine Foods |
| United Breweries |
Cal Maine and United Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and United Breweries
The main advantage of trading using opposite Cal Maine and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, United Breweries 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 United Breweries will offset losses from the drop in United Breweries' long position.| Cal Maine vs. VIENNA INSURANCE GR | Cal Maine vs. Calibre Mining Corp | Cal Maine vs. SERI INDUSTRIAL EO | Cal Maine vs. Japan Post Insurance |
| United Breweries vs. Nomad Foods | United Breweries vs. G III Apparel Group | United Breweries vs. The Hanover Insurance | United Breweries vs. TYSON FOODS A |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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