Correlation Between CAL-MAINE FOODS and Host Hotels

Can any of the company-specific risk be diversified away by investing in both CAL-MAINE FOODS and Host Hotels 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 FOODS and Host Hotels 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 Host Hotels Resorts, you can compare the effects of market volatilities on CAL-MAINE FOODS and Host Hotels 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 FOODS with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL-MAINE FOODS and Host Hotels.

Diversification Opportunities for CAL-MAINE FOODS and Host Hotels

0.76

Correlation Coefficient

CAL-MAINE FOODS  Host Hotels

Poor diversification

The 3 months correlation between CAL-MAINE and Host is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and CAL-MAINE FOODS 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of CAL-MAINE FOODS i.e., CAL-MAINE FOODS and Host Hotels go up and down completely randomly.

Pair Corralation between CAL-MAINE FOODS and Host Hotels

Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 2.25 times more return on investment than Host Hotels. However, CAL-MAINE FOODS is 2.25 times more volatile than Host Hotels Resorts. It trades about -0.04 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about -0.28 per unit of risk. If you would invest  9,679  in CAL MAINE FOODS on December 25, 2024 and sell it today you would lose (1,111) from holding CAL MAINE FOODS or give up 11.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

CAL MAINE FOODS  vs.  Host Hotels Resorts

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 unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Host Hotels Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Host Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CAL-MAINE FOODS and Host Hotels

The main advantage of trading using opposite CAL-MAINE FOODS and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL-MAINE FOODS position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.

The idea behind CAL MAINE FOODS and Host Hotels Resorts 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.