Correlation Between NORTHEAST UTILITIES and Cal Maine
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES 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 NORTHEAST UTILITIES and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and Cal Maine Foods, you can compare the effects of market volatilities on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and Cal Maine.
Diversification Opportunities for NORTHEAST UTILITIES and Cal Maine
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NORTHEAST and Cal is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES 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 NORTHEAST UTILITIES 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 NORTHEAST UTILITIES 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 NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and Cal Maine go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and Cal Maine
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to under-perform the Cal Maine. But the stock apears to be less risky and, when comparing its historical volatility, NORTHEAST UTILITIES is 1.89 times less risky than Cal Maine. The stock trades about -0.11 of its potential returns per unit of risk. The Cal Maine Foods is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 6,638 in Cal Maine Foods on September 29, 2024 and sell it today you would earn a total of 3,086 from holding Cal Maine Foods or generate 46.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. Cal Maine Foods
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| Cal Maine Foods |
NORTHEAST UTILITIES and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and Cal Maine
The main advantage of trading using opposite NORTHEAST UTILITIES and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES 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.| NORTHEAST UTILITIES vs. OAKTRSPECLENDNEW | NORTHEAST UTILITIES vs. BANKINTER ADR 2007 | NORTHEAST UTILITIES vs. National Bank Holdings | NORTHEAST UTILITIES vs. TFS FINANCIAL |
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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