Correlation Between Cal Maine and DICKS Sporting
Can any of the company-specific risk be diversified away by investing in both Cal Maine and DICKS Sporting 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 DICKS Sporting 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 DICKS Sporting Goods, you can compare the effects of market volatilities on Cal Maine and DICKS Sporting 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 DICKS Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and DICKS Sporting.
Diversification Opportunities for Cal Maine and DICKS Sporting
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cal and DICKS is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and DICKS Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKS Sporting Goods 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 DICKS Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKS Sporting Goods has no effect on the direction of Cal Maine i.e., Cal Maine and DICKS Sporting go up and down completely randomly.
Pair Corralation between Cal Maine and DICKS Sporting
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 0.69 times more return on investment than DICKS Sporting. However, Cal Maine Foods is 1.45 times less risky than DICKS Sporting. It trades about 0.23 of its potential returns per unit of risk. DICKS Sporting Goods is currently generating about 0.01 per unit of risk. If you would invest 5,419 in Cal Maine Foods on September 3, 2024 and sell it today you would earn a total of 3,721 from holding Cal Maine Foods or generate 68.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. DICKS Sporting Goods
Performance |
| Timeline |
| Cal Maine Foods |
| DICKS Sporting Goods |
Cal Maine and DICKS Sporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and DICKS Sporting
The main advantage of trading using opposite Cal Maine and DICKS Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, DICKS Sporting 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 DICKS Sporting will offset losses from the drop in DICKS Sporting's long position.| Cal Maine vs. ADRIATIC METALS LS 013355 | Cal Maine vs. Datang International Power | Cal Maine vs. Science Applications International | Cal Maine vs. Harmony Gold Mining |
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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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