Correlation Between Cal Maine and FUYO GENERAL
Can any of the company-specific risk be diversified away by investing in both Cal Maine and FUYO GENERAL 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 FUYO GENERAL 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 FUYO GENERAL LEASE, you can compare the effects of market volatilities on Cal Maine and FUYO GENERAL 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 FUYO GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and FUYO GENERAL.
Diversification Opportunities for Cal Maine and FUYO GENERAL
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cal and FUYO is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and FUYO GENERAL LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUYO GENERAL LEASE 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 FUYO GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUYO GENERAL LEASE has no effect on the direction of Cal Maine i.e., Cal Maine and FUYO GENERAL go up and down completely randomly.
Pair Corralation between Cal Maine and FUYO GENERAL
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 1.93 times more return on investment than FUYO GENERAL. However, Cal Maine is 1.93 times more volatile than FUYO GENERAL LEASE. It trades about 0.28 of its potential returns per unit of risk. FUYO GENERAL LEASE is currently generating about 0.03 per unit of risk. If you would invest 6,472 in Cal Maine Foods on September 25, 2024 and sell it today you would earn a total of 3,352 from holding Cal Maine Foods or generate 51.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. FUYO GENERAL LEASE
Performance |
| Timeline |
| Cal Maine Foods |
| FUYO GENERAL LEASE |
Cal Maine and FUYO GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and FUYO GENERAL
The main advantage of trading using opposite Cal Maine and FUYO GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, FUYO GENERAL 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 FUYO GENERAL will offset losses from the drop in FUYO GENERAL's long position.The idea behind Cal Maine Foods and FUYO GENERAL LEASE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| FUYO GENERAL vs. Ashtead Group plc | FUYO GENERAL vs. WillScot Mobile Mini | FUYO GENERAL vs. Avis Budget Group | FUYO GENERAL vs. Sixt SE |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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