Correlation Between Fevertree Drinks and Cal Maine
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks PLC and Cal Maine Foods, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Cal Maine.
Diversification Opportunities for Fevertree Drinks and Cal Maine
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fevertree and Cal is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC 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 Fevertree Drinks 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 Fevertree Drinks PLC 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 Fevertree Drinks i.e., Fevertree Drinks and Cal Maine go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Cal Maine
Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to under-perform the Cal Maine. In addition to that, Fevertree Drinks is 1.12 times more volatile than Cal Maine Foods. It trades about -0.03 of its total potential returns per unit of risk. Cal Maine Foods is currently generating about 0.09 per unit of volatility. If you would invest 4,405 in Cal Maine Foods on October 11, 2024 and sell it today you would earn a total of 5,581 from holding Cal Maine Foods or generate 126.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fevertree Drinks PLC vs. Cal Maine Foods
Performance |
| Timeline |
| Fevertree Drinks PLC |
| Cal Maine Foods |
Fevertree Drinks and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Cal Maine
The main advantage of trading using opposite Fevertree Drinks and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc |
| Cal Maine vs. National Beverage Corp | Cal Maine vs. THAI BEVERAGE | Cal Maine vs. Fevertree Drinks PLC | Cal Maine vs. KIMBALL ELECTRONICS |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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