Correlation Between NYSE Composite and Cal Maine
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Cal Maine Foods, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Cal Maine.
Diversification Opportunities for NYSE Composite and Cal Maine
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Cal is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Cal Maine go up and down completely randomly.
Pair Corralation between NYSE Composite and Cal Maine
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.81 times less return on investment than Cal Maine. But when comparing it to its historical volatility, NYSE Composite is 2.16 times less risky than Cal Maine. It trades about 0.13 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 8,746 in Cal Maine Foods on August 24, 2024 and sell it today you would earn a total of 832.00 from holding Cal Maine Foods or generate 9.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Cal Maine Foods
Performance |
| Timeline |
NYSE Composite and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Cal Maine Foods
Pair trading matchups for Cal Maine
Pair Trading with NYSE Composite and Cal Maine
The main advantage of trading using opposite NYSE Composite and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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