Correlation Between Cal Maine and PENN NATL
Can any of the company-specific risk be diversified away by investing in both Cal Maine and PENN NATL 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 PENN NATL 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 PENN NATL GAMING, you can compare the effects of market volatilities on Cal Maine and PENN NATL 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 PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and PENN NATL.
Diversification Opportunities for Cal Maine and PENN NATL
Average diversification
The 3 months correlation between Cal and PENN is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING 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 PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of Cal Maine i.e., Cal Maine and PENN NATL go up and down completely randomly.
Pair Corralation between Cal Maine and PENN NATL
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 0.81 times more return on investment than PENN NATL. However, Cal Maine Foods is 1.24 times less risky than PENN NATL. It trades about 0.23 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about 0.06 per unit of risk. If you would invest 5,782 in Cal Maine Foods on October 18, 2024 and sell it today you would earn a total of 4,833 from holding Cal Maine Foods or generate 83.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. PENN NATL GAMING
Performance |
| Timeline |
| Cal Maine Foods |
| PENN NATL GAMING |
Cal Maine and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and PENN NATL
The main advantage of trading using opposite Cal Maine and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, PENN NATL 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 PENN NATL will offset losses from the drop in PENN NATL's long position.| Cal Maine vs. Silicon Motion Technology | Cal Maine vs. BOS BETTER ONLINE | Cal Maine vs. X FAB Silicon Foundries | Cal Maine vs. TIANDE CHEMICAL |
| PENN NATL vs. NTG Nordic Transport | PENN NATL vs. DICKS Sporting Goods | PENN NATL vs. TYSON FOODS A | PENN NATL vs. Cal Maine Foods |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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