Correlation Between Cal-Maine Foods and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Cal-Maine Foods and STMICROELECTRONICS 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 Foods and STMICROELECTRONICS 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 STMICROELECTRONICS, you can compare the effects of market volatilities on Cal-Maine Foods and STMICROELECTRONICS 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 Foods with a short position of STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal-Maine Foods and STMICROELECTRONICS.
Diversification Opportunities for Cal-Maine Foods and STMICROELECTRONICS
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cal-Maine and STMICROELECTRONICS is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS and Cal-Maine Foods 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of Cal-Maine Foods i.e., Cal-Maine Foods and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between Cal-Maine Foods and STMICROELECTRONICS
Assuming the 90 days trading horizon Cal Maine Foods is expected to under-perform the STMICROELECTRONICS. In addition to that, Cal-Maine Foods is 1.1 times more volatile than STMICROELECTRONICS. It trades about -0.41 of its total potential returns per unit of risk. STMICROELECTRONICS is currently generating about 0.14 per unit of volatility. If you would invest 2,190 in STMICROELECTRONICS on December 9, 2024 and sell it today you would earn a total of 199.00 from holding STMICROELECTRONICS or generate 9.09% 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. STMICROELECTRONICS
Performance |
| Timeline |
| Cal Maine Foods |
| STMICROELECTRONICS |
Cal-Maine Foods and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal-Maine Foods and STMICROELECTRONICS
The main advantage of trading using opposite Cal-Maine Foods and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal-Maine Foods position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.| Cal-Maine Foods vs. The Hongkong and | ||
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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