Correlation Between Cal Maine and GREEN PLAINS

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

Diversification Opportunities for Cal Maine and GREEN PLAINS

-0.71

Correlation Coefficient

Cal Maine  GREEN PLAINS

Pay attention - limited upside

The 3 months correlation between Cal and GREEN is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and GREEN PLAINS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREEN PLAINS 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 GREEN PLAINS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREEN PLAINS has no effect on the direction of Cal Maine i.e., Cal Maine and GREEN PLAINS go up and down completely randomly.

Pair Corralation between Cal Maine and GREEN PLAINS

Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 0.58 times more return on investment than GREEN PLAINS. However, Cal Maine Foods is 1.72 times less risky than GREEN PLAINS. It trades about 0.2 of its potential returns per unit of risk. GREEN PLAINS is currently generating about -0.03 per unit of risk. If you would invest  8,159  in Cal Maine Foods on October 25, 2024 and sell it today you would earn a total of  2,566  from holding Cal Maine Foods or generate 31.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Cal Maine Foods  vs.  GREEN PLAINS

Cal Maine Foods

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Maine Foods are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cal Maine unveiled solid returns over the last few months and may actually be approaching a breakup point.

GREEN PLAINS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GREEN PLAINS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cal Maine and GREEN PLAINS

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

The idea behind Cal Maine Foods and GREEN PLAINS 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.