Correlation Between Grand Canyon and CAL MAINE
Can any of the company-specific risk be diversified away by investing in both Grand Canyon 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 Grand Canyon and CAL MAINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Canyon Education and CAL MAINE FOODS, you can compare the effects of market volatilities on Grand Canyon 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 Grand Canyon with a short position of CAL MAINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and CAL MAINE.
Diversification Opportunities for Grand Canyon and CAL MAINE
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grand and CAL is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education 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 Grand Canyon 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 Grand Canyon Education 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 Grand Canyon i.e., Grand Canyon and CAL MAINE go up and down completely randomly.
Pair Corralation between Grand Canyon and CAL MAINE
Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 1.6 times more return on investment than CAL MAINE. However, Grand Canyon is 1.6 times more volatile than CAL MAINE FOODS. It trades about 0.2 of its potential returns per unit of risk. CAL MAINE FOODS is currently generating about 0.25 per unit of risk. If you would invest 12,200 in Grand Canyon Education on September 22, 2024 and sell it today you would earn a total of 3,300 from holding Grand Canyon Education or generate 27.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Canyon Education vs. CAL MAINE FOODS
Performance |
| Timeline |
| Grand Canyon Education |
| CAL MAINE FOODS |
Grand Canyon and CAL MAINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and CAL MAINE
The main advantage of trading using opposite Grand Canyon and CAL MAINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon 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.| Grand Canyon vs. STMicroelectronics NV | Grand Canyon vs. CompuGroup Medical SE | Grand Canyon vs. AOI Electronics Co | Grand Canyon vs. Merit Medical Systems |
| CAL MAINE vs. CHINA EDUCATION GROUP | CAL MAINE vs. Shin Etsu Chemical Co | CAL MAINE vs. Grand Canyon Education | CAL MAINE vs. G III Apparel Group |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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