Correlation Between Cal Maine and Prudential Plc
Can any of the company-specific risk be diversified away by investing in both Cal Maine and Prudential Plc 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 Prudential Plc 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 Prudential plc, you can compare the effects of market volatilities on Cal Maine and Prudential Plc 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 Prudential Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Prudential Plc.
Diversification Opportunities for Cal Maine and Prudential Plc
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cal and Prudential is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Prudential plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential plc 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 Prudential Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential plc has no effect on the direction of Cal Maine i.e., Cal Maine and Prudential Plc go up and down completely randomly.
Pair Corralation between Cal Maine and Prudential Plc
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 1.01 times more return on investment than Prudential Plc. However, Cal Maine is 1.01 times more volatile than Prudential plc. It trades about 0.16 of its potential returns per unit of risk. Prudential plc is currently generating about -0.03 per unit of risk. If you would invest 4,815 in Cal Maine Foods on November 3, 2024 and sell it today you would earn a total of 5,510 from holding Cal Maine Foods or generate 114.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. Prudential plc
Performance |
| Timeline |
| Cal Maine Foods |
| Prudential plc |
Cal Maine and Prudential Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and Prudential Plc
The main advantage of trading using opposite Cal Maine and Prudential Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, Prudential Plc 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 Prudential Plc will offset losses from the drop in Prudential Plc's long position.| Cal Maine vs. Elmos Semiconductor SE | Cal Maine vs. LG Display Co | Cal Maine vs. Tower Semiconductor | Cal Maine vs. ePlay Digital |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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