Correlation Between ASPEN TECHINC and Cal-Maine Foods
Can any of the company-specific risk be diversified away by investing in both ASPEN TECHINC 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 ASPEN TECHINC 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 ASPEN TECHINC DL and Cal Maine Foods, you can compare the effects of market volatilities on ASPEN TECHINC 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 ASPEN TECHINC with a short position of Cal-Maine Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN TECHINC and Cal-Maine Foods.
Diversification Opportunities for ASPEN TECHINC and Cal-Maine Foods
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ASPEN and Cal-Maine is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL 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 ASPEN TECHINC 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 ASPEN TECHINC DL 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 ASPEN TECHINC i.e., ASPEN TECHINC and Cal-Maine Foods go up and down completely randomly.
Pair Corralation between ASPEN TECHINC and Cal-Maine Foods
Assuming the 90 days horizon ASPEN TECHINC DL is expected to generate 0.2 times more return on investment than Cal-Maine Foods. However, ASPEN TECHINC DL is 5.07 times less risky than Cal-Maine Foods. It trades about -0.34 of its potential returns per unit of risk. Cal Maine Foods is currently generating about -0.34 per unit of risk. If you would invest 25,600 in ASPEN TECHINC DL on December 12, 2024 and sell it today you would lose (1,400) from holding ASPEN TECHINC DL or give up 5.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASPEN TECHINC DL vs. Cal Maine Foods
Performance |
| Timeline |
| ASPEN TECHINC DL |
| Cal Maine Foods |
ASPEN TECHINC and Cal-Maine Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASPEN TECHINC and Cal-Maine Foods
The main advantage of trading using opposite ASPEN TECHINC and Cal-Maine Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPEN TECHINC 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' long position.| ASPEN TECHINC vs. BRAGG GAMING GRP | ||
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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