Correlation Between Global Clean and Cal Maine
Can any of the company-specific risk be diversified away by investing in both Global Clean 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 Global Clean and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Clean Energy and Cal Maine Foods, you can compare the effects of market volatilities on Global Clean 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 Global Clean with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Clean and Cal Maine.
Diversification Opportunities for Global Clean and Cal Maine
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Cal is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Global Clean Energy 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 Global Clean 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 Global Clean Energy 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 Global Clean i.e., Global Clean and Cal Maine go up and down completely randomly.
Pair Corralation between Global Clean and Cal Maine
Given the investment horizon of 90 days Global Clean is expected to generate 1.21 times less return on investment than Cal Maine. In addition to that, Global Clean is 4.36 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 0.18 per unit of volatility. If you would invest 4,369 in Cal Maine Foods on August 25, 2024 and sell it today you would earn a total of 5,227 from holding Cal Maine Foods or generate 119.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Global Clean Energy vs. Cal Maine Foods
Performance |
| Timeline |
| Global Clean Energy |
| Cal Maine Foods |
Global Clean and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Clean and Cal Maine
The main advantage of trading using opposite Global Clean and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Clean 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.| Global Clean vs. Embotelladora Andina SA | Global Clean vs. Signet International Holdings | Global Clean vs. National Beverage Corp | Global Clean vs. PT Astra International |
| Cal Maine vs. Bunge Limited | Cal Maine vs. Tyson Foods | Cal Maine vs. Dole PLC | Cal Maine vs. Adecoagro SA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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