Correlation Between Wilmar International and Cal Maine

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

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

Diversification Opportunities for Wilmar International and Cal Maine

-0.3

Correlation Coefficient

Wilmar International  Cal Maine

Very good diversification

The 3 months correlation between Wilmar and Cal is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International 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 Wilmar International 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 Wilmar International 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 Wilmar International i.e., Wilmar International and Cal Maine go up and down completely randomly.

Pair Corralation between Wilmar International and Cal Maine

Assuming the 90 days horizon Wilmar International is expected to under-perform the Cal Maine. In addition to that, Wilmar International is 1.34 times more volatile than Cal Maine Foods. It trades about -0.03 of its total potential returns per unit of risk. Cal Maine Foods is currently generating about 0.36 per unit of volatility. If you would invest  6,816  in Cal Maine Foods on September 4, 2024 and sell it today you would earn a total of  3,048  from holding Cal Maine Foods or generate 44.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Wilmar International  vs.  Cal Maine Foods

Wilmar International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmar International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Wilmar International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Cal Maine Foods

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Maine Foods are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Cal Maine displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wilmar International and Cal Maine

The main advantage of trading using opposite Wilmar International and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmar International 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 Wilmar International 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..