Correlation Between Provident Financial and Cal Maine
Can any of the company-specific risk be diversified away by investing in both Provident Financial 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 Provident Financial and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Provident Financial Services and Cal Maine Foods, you can compare the effects of market volatilities on Provident Financial 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 Provident Financial with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Financial and Cal Maine.
Diversification Opportunities for Provident Financial and Cal Maine
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Provident and Cal is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Provident Financial Services 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 Provident Financial 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 Provident Financial Services 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 Provident Financial i.e., Provident Financial and Cal Maine go up and down completely randomly.
Pair Corralation between Provident Financial and Cal Maine
Assuming the 90 days horizon Provident Financial Services is expected to under-perform the Cal Maine. But the stock apears to be less risky and, when comparing its historical volatility, Provident Financial Services is 1.47 times less risky than Cal Maine. The stock trades about -0.06 of its potential returns per unit of risk. The Cal Maine Foods is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,027 in Cal Maine Foods on November 3, 2024 and sell it today you would earn a total of 298.00 from holding Cal Maine Foods or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Provident Financial Services vs. Cal Maine Foods
Performance |
| Timeline |
| Provident Financial |
| Cal Maine Foods |
Provident Financial and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Financial and Cal Maine
The main advantage of trading using opposite Provident Financial and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Financial 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.| Provident Financial vs. PARKEN Sport Entertainment | Provident Financial vs. American Eagle Outfitters | Provident Financial vs. SOEDER SPORTFISKE AB | Provident Financial vs. SPORTING |
| Cal Maine vs. VITEC SOFTWARE GROUP | Cal Maine vs. Guidewire Software | Cal Maine vs. Check Point Software | Cal Maine vs. USU Software AG |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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