Correlation Between CAL-MAINE FOODS and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both CAL-MAINE FOODS and Selective Insurance 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 Selective Insurance 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 Selective Insurance Group, you can compare the effects of market volatilities on CAL-MAINE FOODS and Selective Insurance 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 Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL-MAINE FOODS and Selective Insurance.
Diversification Opportunities for CAL-MAINE FOODS and Selective Insurance
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CAL-MAINE and Selective is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance 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 Selective Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selective Insurance has no effect on the direction of CAL-MAINE FOODS i.e., CAL-MAINE FOODS and Selective Insurance go up and down completely randomly.
Pair Corralation between CAL-MAINE FOODS and Selective Insurance
Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 1.2 times more return on investment than Selective Insurance. However, CAL-MAINE FOODS is 1.2 times more volatile than Selective Insurance Group. It trades about 0.13 of its potential returns per unit of risk. Selective Insurance Group is currently generating about 0.0 per unit of risk. If you would invest 4,394 in CAL MAINE FOODS on October 4, 2024 and sell it today you would earn a total of 5,480 from holding CAL MAINE FOODS or generate 124.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
CAL MAINE FOODS vs. Selective Insurance Group
Performance |
Timeline |
CAL MAINE FOODS |
Selective Insurance |
CAL-MAINE FOODS and Selective Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CAL-MAINE FOODS and Selective Insurance
The main advantage of trading using opposite CAL-MAINE FOODS and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL-MAINE FOODS position performs unexpectedly, Selective Insurance 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 Selective Insurance will offset losses from the drop in Selective Insurance's long position.CAL-MAINE FOODS vs. Laureate Education | CAL-MAINE FOODS vs. Harmony Gold Mining | CAL-MAINE FOODS vs. EEDUCATION ALBERT AB | CAL-MAINE FOODS vs. TAL Education Group |
Selective Insurance vs. KB HOME | Selective Insurance vs. American Homes 4 | Selective Insurance vs. Haverty Furniture Companies | Selective Insurance vs. Neinor Homes SA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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