Correlation Between Cal Maine and Dole PLC

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

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

Diversification Opportunities for Cal Maine and Dole PLC

-0.43

Correlation Coefficient

Cal Maine  Dole PLC

Very good diversification

The 3 months correlation between Cal and Dole is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Dole PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dole PLC and Cal Maine 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 Cal Maine Foods are associated (or correlated) with Dole PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dole PLC has no effect on the direction of Cal Maine i.e., Cal Maine and Dole PLC go up and down completely randomly.

Pair Corralation between Cal Maine and Dole PLC

Given the investment horizon of 90 days Cal Maine Foods is expected to under-perform the Dole PLC. In addition to that, Cal Maine is 3.01 times more volatile than Dole PLC. It trades about -0.22 of its total potential returns per unit of risk. Dole PLC is currently generating about 0.07 per unit of volatility. If you would invest  1,381  in Dole PLC on November 28, 2024 and sell it today you would earn a total of  24.00  from holding Dole PLC or generate 1.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cal Maine Foods  vs.  Dole PLC

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 latest fragile performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Dole PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dole PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Cal Maine and Dole PLC

The main advantage of trading using opposite Cal Maine and Dole PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, Dole PLC 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 Dole PLC will offset losses from the drop in Dole PLC's long position.

The idea behind Cal Maine Foods and Dole PLC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.