Correlation Between BranchOut Food and Cal Maine

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

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

Diversification Opportunities for BranchOut Food and Cal Maine

0.18

Correlation Coefficient

BranchOut Food  Cal Maine

Average diversification

The 3 months correlation between BranchOut and Cal is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding BranchOut Food Common 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 BranchOut Food 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 BranchOut Food Common 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 BranchOut Food i.e., BranchOut Food and Cal Maine go up and down completely randomly.

Pair Corralation between BranchOut Food and Cal Maine

Considering the 90-day investment horizon BranchOut Food Common is expected to generate 1.54 times more return on investment than Cal Maine. However, BranchOut Food is 1.54 times more volatile than Cal Maine Foods. It trades about 0.16 of its potential returns per unit of risk. Cal Maine Foods is currently generating about -0.03 per unit of risk. If you would invest  174.00  in BranchOut Food Common on December 28, 2024 and sell it today you would earn a total of  91.00  from holding BranchOut Food Common or generate 52.3% return on investment over 90 days.

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

BranchOut Food Common  vs.  Cal Maine Foods

BranchOut Food Common

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BranchOut Food Common are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, BranchOut Food reported solid returns over the last few months and may actually be approaching a breakup point.

Cal Maine Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cal Maine Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Cal Maine is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BranchOut Food and Cal Maine

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

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.