Correlation Between Canadian Utilities and CAL-MAINE FOODS
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and CAL-MAINE FOODS 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 Canadian Utilities and CAL-MAINE FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and CAL MAINE FOODS, you can compare the effects of market volatilities on Canadian Utilities and CAL-MAINE FOODS 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 Canadian Utilities with a short position of CAL-MAINE FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and CAL-MAINE FOODS.
Diversification Opportunities for Canadian Utilities and CAL-MAINE FOODS
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Canadian and CAL-MAINE is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and CAL MAINE FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAL MAINE FOODS and Canadian Utilities 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 Canadian Utilities Limited are associated (or correlated) with CAL-MAINE FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAL MAINE FOODS has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and CAL-MAINE FOODS go up and down completely randomly.
Pair Corralation between Canadian Utilities and CAL-MAINE FOODS
Assuming the 90 days horizon Canadian Utilities is expected to generate 7.06 times less return on investment than CAL-MAINE FOODS. But when comparing it to its historical volatility, Canadian Utilities Limited is 3.2 times less risky than CAL-MAINE FOODS. It trades about 0.12 of its potential returns per unit of risk. CAL MAINE FOODS is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 9,824 in CAL MAINE FOODS on October 23, 2024 and sell it today you would earn a total of 1,096 from holding CAL MAINE FOODS or generate 11.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Canadian Utilities Limited vs. CAL MAINE FOODS
Performance |
| Timeline |
| Canadian Utilities |
| CAL MAINE FOODS |
Canadian Utilities and CAL-MAINE FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and CAL-MAINE FOODS
The main advantage of trading using opposite Canadian Utilities and CAL-MAINE FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, CAL-MAINE FOODS 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 CAL-MAINE FOODS will offset losses from the drop in CAL-MAINE FOODS's long position.| Canadian Utilities vs. De Grey Mining | Canadian Utilities vs. Elmos Semiconductor SE | Canadian Utilities vs. Jacquet Metal Service | Canadian Utilities vs. Harmony Gold Mining |
| CAL-MAINE FOODS vs. GOLD ROAD RES | CAL-MAINE FOODS vs. Texas Roadhouse | CAL-MAINE FOODS vs. Canadian Utilities Limited | CAL-MAINE FOODS vs. Global Ship Lease |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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