Correlation Between Cal Maine and Limoneira

Can any of the company-specific risk be diversified away by investing in both Cal Maine and Limoneira 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 Limoneira 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 Limoneira Co, you can compare the effects of market volatilities on Cal Maine and Limoneira 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 Limoneira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Limoneira.

Diversification Opportunities for Cal Maine and Limoneira

0.53

Correlation Coefficient

Cal Maine  Limoneira

Very weak diversification

The 3 months correlation between Cal and Limoneira is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira 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 Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Cal Maine i.e., Cal Maine and Limoneira go up and down completely randomly.

Pair Corralation between Cal Maine and Limoneira

Given the investment horizon of 90 days Cal Maine Foods is expected to generate 1.44 times more return on investment than Limoneira. However, Cal Maine is 1.44 times more volatile than Limoneira Co. It trades about -0.03 of its potential returns per unit of risk. Limoneira Co is currently generating about -0.19 per unit of risk. If you would invest  10,066  in Cal Maine Foods on December 29, 2024 and sell it today you would lose (845.00) from holding Cal Maine Foods or give up 8.39% of portfolio value over 90 days.

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

Cal Maine Foods  vs.  Limoneira Co

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.

Limoneira

Risk-Adjusted Performance

Very Weak

Over the last 90 days Limoneira Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Cal Maine and Limoneira

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

The idea behind Cal Maine Foods and Limoneira Co 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.