Correlation Between Cal Maine and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both Cal Maine and Fortescue Metals 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 Fortescue Metals 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 Fortescue Metals Group, you can compare the effects of market volatilities on Cal Maine and Fortescue Metals 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 Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Fortescue Metals.
Diversification Opportunities for Cal Maine and Fortescue Metals
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cal and Fortescue is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals 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 Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of Cal Maine i.e., Cal Maine and Fortescue Metals go up and down completely randomly.
Pair Corralation between Cal Maine and Fortescue Metals
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 2.11 times more return on investment than Fortescue Metals. However, Cal Maine is 2.11 times more volatile than Fortescue Metals Group. It trades about -0.04 of its potential returns per unit of risk. Fortescue Metals Group is currently generating about -0.19 per unit of risk. If you would invest 10,220 in Cal Maine Foods on October 16, 2024 and sell it today you would lose (338.00) from holding Cal Maine Foods or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. Fortescue Metals Group
Performance |
| Timeline |
| Cal Maine Foods |
| Fortescue Metals |
Cal Maine and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and Fortescue Metals
The main advantage of trading using opposite Cal Maine and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, Fortescue Metals 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| Cal Maine vs. Treasury Wine Estates | Cal Maine vs. Cars Inc | Cal Maine vs. WT OFFSHORE | Cal Maine vs. Grupo Carso SAB |
| Fortescue Metals vs. GEELY AUTOMOBILE | Fortescue Metals vs. Zoom Video Communications | Fortescue Metals vs. SOCKET MOBILE NEW | Fortescue Metals vs. Highlight Communications AG |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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