Correlation Between Gladstone Investment and Cal Maine

Can any of the company-specific risk be diversified away by investing in both Gladstone Investment 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 Gladstone Investment and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gladstone Investment and Cal Maine Foods, you can compare the effects of market volatilities on Gladstone Investment 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 Gladstone Investment with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Cal Maine.

Diversification Opportunities for Gladstone Investment and Cal Maine

0.75

Correlation Coefficient

Gladstone Investment  Cal Maine

Poor diversification

The 3 months correlation between Gladstone and Cal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment i.e., Gladstone Investment and Cal Maine go up and down completely randomly.

Pair Corralation between Gladstone Investment and Cal Maine

Assuming the 90 days horizon Gladstone Investment is expected to under-perform the Cal Maine. But the stock apears to be less risky and, when comparing its historical volatility, Gladstone Investment is 2.18 times less risky than Cal Maine. The stock trades about -0.08 of its potential returns per unit of risk. The Cal Maine Foods is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  8,928  in Cal Maine Foods on September 21, 2024 and sell it today you would earn a total of  1,152  from holding Cal Maine Foods or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Gladstone Investment  vs.  Cal Maine Foods

Gladstone Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gladstone Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cal Maine Foods

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Maine Foods are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Cal Maine unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gladstone Investment and Cal Maine

The main advantage of trading using opposite Gladstone Investment and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment 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.

The idea behind Gladstone Investment and Cal Maine Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.