Correlation Between WILLIS LEASE and CAL-MAINE FOODS
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE 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 WILLIS LEASE 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 WILLIS LEASE FIN and CAL MAINE FOODS, you can compare the effects of market volatilities on WILLIS LEASE 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 WILLIS LEASE with a short position of CAL-MAINE FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and CAL-MAINE FOODS.
Diversification Opportunities for WILLIS LEASE and CAL-MAINE FOODS
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WILLIS and CAL-MAINE is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN 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 WILLIS LEASE 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 WILLIS LEASE FIN 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 WILLIS LEASE i.e., WILLIS LEASE and CAL-MAINE FOODS go up and down completely randomly.
Pair Corralation between WILLIS LEASE and CAL-MAINE FOODS
Assuming the 90 days horizon WILLIS LEASE FIN is expected to under-perform the CAL-MAINE FOODS. But the stock apears to be less risky and, when comparing its historical volatility, WILLIS LEASE FIN is 1.01 times less risky than CAL-MAINE FOODS. The stock trades about -0.08 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 9,824 in CAL MAINE FOODS on October 24, 2024 and sell it today you would earn a total of 1,096 from holding CAL MAINE FOODS or generate 11.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. CAL MAINE FOODS
Performance |
| Timeline |
| WILLIS LEASE FIN |
| CAL MAINE FOODS |
WILLIS LEASE and CAL-MAINE FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and CAL-MAINE FOODS
The main advantage of trading using opposite WILLIS LEASE and CAL-MAINE FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE 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's long position.| WILLIS LEASE vs. T Mobile | WILLIS LEASE vs. Charter Communications | WILLIS LEASE vs. ecotel communication ag | WILLIS LEASE vs. Zoom Video Communications |
| CAL-MAINE FOODS vs. China Development Bank | CAL-MAINE FOODS vs. AUTOHOME INC A | CAL-MAINE FOODS vs. WILLIS LEASE FIN | CAL-MAINE FOODS vs. KENEDIX OFFICE INV |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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