Correlation Between Cal Maine and Performance Food
Can any of the company-specific risk be diversified away by investing in both Cal Maine and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on Cal Maine and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Performance Food.
Diversification Opportunities for Cal Maine and Performance Food
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cal and Performance is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Cal Maine i.e., Cal Maine and Performance Food go up and down completely randomly.
Pair Corralation between Cal Maine and Performance Food
Assuming the 90 days trading horizon Cal Maine Foods is expected to under-perform the Performance Food. In addition to that, Cal Maine is 1.83 times more volatile than Performance Food Group. It trades about -0.38 of its total potential returns per unit of risk. Performance Food Group is currently generating about -0.3 per unit of volatility. If you would invest 8,600 in Performance Food Group on December 6, 2024 and sell it today you would lose (1,000.00) from holding Performance Food Group or give up 11.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cal Maine Foods vs. Performance Food Group
Performance |
| Timeline |
| Cal Maine Foods |
| Performance Food |
Cal Maine and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and Performance Food
The main advantage of trading using opposite Cal Maine and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| Cal Maine vs. COMPUTERSHARE | ||
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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