Correlation Between Cal Maine and Wilmar International

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

Diversification Opportunities for Cal Maine and Wilmar International

-0.57

Correlation Coefficient

Cal Maine  Wilmar International

Excellent diversification

The 3 months correlation between Cal and Wilmar is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Wilmar International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International 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 Wilmar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmar International has no effect on the direction of Cal Maine i.e., Cal Maine and Wilmar International go up and down completely randomly.

Pair Corralation between Cal Maine and Wilmar International

Given the investment horizon of 90 days Cal Maine Foods is expected to under-perform the Wilmar International. In addition to that, Cal Maine is 2.33 times more volatile than Wilmar International. It trades about -0.02 of its total potential returns per unit of risk. Wilmar International is currently generating about 0.11 per unit of volatility. If you would invest  2,261  in Wilmar International on December 27, 2024 and sell it today you would earn a total of  217.00  from holding Wilmar International or generate 9.6% 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.  Wilmar International

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.

Wilmar International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wilmar International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, Wilmar International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cal Maine and Wilmar International

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

The idea behind Cal Maine Foods and Wilmar International 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 Stocks Directory module to find actively traded stocks across global markets.