Correlation Between SIERRA METALS and Cal Maine
Can any of the company-specific risk be diversified away by investing in both SIERRA METALS and Cal Maine 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 SIERRA METALS and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIERRA METALS and Cal Maine Foods, you can compare the effects of market volatilities on SIERRA METALS and Cal Maine 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 SIERRA METALS with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIERRA METALS and Cal Maine.
Diversification Opportunities for SIERRA METALS and Cal Maine
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between SIERRA and Cal is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding SIERRA METALS 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 SIERRA METALS 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 SIERRA METALS are associated (or correlated) with Cal Maine. 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 SIERRA METALS i.e., SIERRA METALS and Cal Maine go up and down completely randomly.
Pair Corralation between SIERRA METALS and Cal Maine
Assuming the 90 days trading horizon SIERRA METALS is expected to generate 1.36 times less return on investment than Cal Maine. But when comparing it to its historical volatility, SIERRA METALS is 1.48 times less risky than Cal Maine. It trades about 0.15 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 10,095 in Cal Maine Foods on October 19, 2024 and sell it today you would earn a total of 720.00 from holding Cal Maine Foods or generate 7.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIERRA METALS vs. Cal Maine Foods
Performance |
| Timeline |
| SIERRA METALS |
| Cal Maine Foods |
SIERRA METALS and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIERRA METALS and Cal Maine
The main advantage of trading using opposite SIERRA METALS and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIERRA METALS position performs unexpectedly, Cal Maine 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 will offset losses from the drop in Cal Maine's long position.| SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc |
| Cal Maine vs. Aluminum of | Cal Maine vs. Dairy Farm International | Cal Maine vs. SIERRA METALS | Cal Maine vs. Air Transport Services |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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