Correlation Between Cal-Maine Foods and Virtus Investment

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

Diversification Opportunities for Cal-Maine Foods and Virtus Investment

0.7

Correlation Coefficient

Cal-Maine Foods  Virtus Investment

Poor diversification

The 3 months correlation between Cal-Maine and Virtus is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Cal-Maine Foods i.e., Cal-Maine Foods and Virtus Investment go up and down completely randomly.

Pair Corralation between Cal-Maine Foods and Virtus Investment

Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 1.52 times more return on investment than Virtus Investment. However, Cal-Maine Foods is 1.52 times more volatile than Virtus Investment Partners. It trades about -0.08 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about -0.19 per unit of risk. If you would invest  9,846  in Cal Maine Foods on December 20, 2024 and sell it today you would lose (1,744) from holding Cal Maine Foods or give up 17.71% of portfolio value over 90 days.

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

Cal Maine Foods  vs.  Virtus Investment Partners

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Virtus Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Investment Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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 Virtus Investment

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

The idea behind Cal Maine Foods and Virtus Investment Partners 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.