Correlation Between Cal Maine and Provident Financial
Can any of the company-specific risk be diversified away by investing in both Cal Maine and Provident Financial 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 Provident Financial 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 Provident Financial Services, you can compare the effects of market volatilities on Cal Maine and Provident Financial 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 Provident Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Provident Financial.
Diversification Opportunities for Cal Maine and Provident Financial
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cal and Provident is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Provident Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident Financial 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 Provident Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Financial has no effect on the direction of Cal Maine i.e., Cal Maine and Provident Financial go up and down completely randomly.
Pair Corralation between Cal Maine and Provident Financial
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 1.57 times more return on investment than Provident Financial. However, Cal Maine is 1.57 times more volatile than Provident Financial Services. It trades about 0.11 of its potential returns per unit of risk. Provident Financial Services is currently generating about -0.14 per unit of risk. If you would invest 9,209 in Cal Maine Foods on November 3, 2024 and sell it today you would earn a total of 1,116 from holding Cal Maine Foods or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. Provident Financial Services
Performance |
| Timeline |
| Cal Maine Foods |
| Provident Financial |
Cal Maine and Provident Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and Provident Financial
The main advantage of trading using opposite Cal Maine and Provident Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, Provident Financial 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 Provident Financial will offset losses from the drop in Provident Financial's long position.| Cal Maine vs. VITEC SOFTWARE GROUP | Cal Maine vs. Guidewire Software | Cal Maine vs. Check Point Software | Cal Maine vs. USU Software AG |
| Provident Financial vs. PARKEN Sport Entertainment | Provident Financial vs. American Eagle Outfitters | Provident Financial vs. SOEDER SPORTFISKE AB | Provident Financial vs. SPORTING |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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