Correlation Between SP Global and Cal Maine
Can any of the company-specific risk be diversified away by investing in both SP Global 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 SP Global and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP Global and Cal Maine Foods, you can compare the effects of market volatilities on SP Global 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 SP Global with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Global and Cal Maine.
Diversification Opportunities for SP Global and Cal Maine
Poor diversification
The 3 months correlation between MHL and Cal is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SP Global 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 SP Global 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 SP Global 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 SP Global i.e., SP Global and Cal Maine go up and down completely randomly.
Pair Corralation between SP Global and Cal Maine
Assuming the 90 days horizon SP Global is expected to generate 0.43 times more return on investment than Cal Maine. However, SP Global is 2.31 times less risky than Cal Maine. It trades about 0.18 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.01 per unit of risk. If you would invest 48,700 in SP Global on November 7, 2024 and sell it today you would earn a total of 2,420 from holding SP Global or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
SP Global vs. Cal Maine Foods
Performance |
| Timeline |
| SP Global |
| Cal Maine Foods |
SP Global and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP Global and Cal Maine
The main advantage of trading using opposite SP Global and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Global 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.| SP Global vs. Algonquin Power Utilities | SP Global vs. CN DATANG C | SP Global vs. Canadian Utilities Limited | SP Global vs. DATATEC LTD 2 |
| Cal Maine vs. National Retail Properties | Cal Maine vs. CANON MARKETING JP | Cal Maine vs. Harmony Gold Mining | Cal Maine vs. Canon Marketing Japan |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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