Correlation Between Cal Maine and North American
Can any of the company-specific risk be diversified away by investing in both Cal Maine and North American 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 North American 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 North American Construction, you can compare the effects of market volatilities on Cal Maine and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and North American.
Diversification Opportunities for Cal Maine and North American
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cal and North is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of Cal Maine i.e., Cal Maine and North American go up and down completely randomly.
Pair Corralation between Cal Maine and North American
Assuming the 90 days trading horizon Cal Maine Foods is expected to under-perform the North American. In addition to that, Cal Maine is 1.13 times more volatile than North American Construction. It trades about -0.04 of its total potential returns per unit of risk. North American Construction is currently generating about 0.05 per unit of volatility. If you would invest 1,920 in North American Construction on October 16, 2024 and sell it today you would earn a total of 30.00 from holding North American Construction or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.12% |
| Values | Daily Returns |
Cal Maine Foods vs. North American Construction
Performance |
| Timeline |
| Cal Maine Foods |
| North American Const |
Cal Maine and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and North American
The main advantage of trading using opposite Cal Maine and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| Cal Maine vs. Treasury Wine Estates | Cal Maine vs. Cars Inc | Cal Maine vs. WT OFFSHORE | Cal Maine vs. Grupo Carso SAB |
| North American vs. NTT DATA | North American vs. CompuGroup Medical SE | North American vs. Data Modul AG | North American vs. Pure Storage |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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