Correlation Between Limoneira and Cal Maine

Can any of the company-specific risk be diversified away by investing in both Limoneira and Cal Maine 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 Limoneira and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Limoneira Co and Cal Maine Foods, you can compare the effects of market volatilities on Limoneira and Cal Maine 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 Limoneira with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Limoneira and Cal Maine.

Diversification Opportunities for Limoneira and Cal Maine

0.53

Correlation Coefficient

Limoneira  Cal Maine

Very weak diversification

The 3 months correlation between Limoneira and Cal is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Limoneira Co and Cal Maine Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Maine Foods and Limoneira 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 Limoneira Co are associated (or correlated) with Cal Maine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Maine Foods has no effect on the direction of Limoneira i.e., Limoneira and Cal Maine go up and down completely randomly.

Pair Corralation between Limoneira and Cal Maine

Given the investment horizon of 90 days Limoneira Co is expected to under-perform the Cal Maine. But the stock apears to be less risky and, when comparing its historical volatility, Limoneira Co is 1.44 times less risky than Cal Maine. The stock trades about -0.19 of its potential returns per unit of risk. The Cal Maine Foods is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  10,066  in Cal Maine Foods on December 29, 2024 and sell it today you would lose (845.00) from holding Cal Maine Foods or give up 8.39% of portfolio value over 90 days.

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

Limoneira Co  vs.  Cal Maine Foods

Limoneira

Risk-Adjusted Performance

Very Weak

Over the last 90 days Limoneira Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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.

Pair Trading with Limoneira and Cal Maine

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

The idea behind Limoneira Co and Cal Maine Foods 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.