Correlation Between IMPERIAL TOBACCO and Cal-Maine Foods
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO and Cal Maine Foods, you can compare the effects of market volatilities on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO with a short position of Cal-Maine Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Cal-Maine Foods.
Diversification Opportunities for IMPERIAL TOBACCO and Cal-Maine Foods
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IMPERIAL and Cal-Maine is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Cal-Maine Foods go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Cal-Maine Foods
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.28 times more return on investment than Cal-Maine Foods. However, IMPERIAL TOBACCO is 3.56 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 -0.34 per unit of risk. If you would invest 3,357 in IMPERIAL TOBACCO on December 12, 2024 and sell it today you would lose (98.00) from holding IMPERIAL TOBACCO or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Cal Maine Foods
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Cal Maine Foods |
IMPERIAL TOBACCO and Cal-Maine Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Cal-Maine Foods
The main advantage of trading using opposite IMPERIAL TOBACCO and Cal-Maine Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO 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' long position.| IMPERIAL TOBACCO vs. CNVISION MEDIA | ||
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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