Correlation Between Cal Maine and Alico

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

Diversification Opportunities for Cal Maine and Alico

-0.75

Correlation Coefficient

Cal Maine  Alico

Pay attention - limited upside

The 3 months correlation between Cal and Alico is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Alico Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alico Inc 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 Alico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alico Inc has no effect on the direction of Cal Maine i.e., Cal Maine and Alico go up and down completely randomly.

Pair Corralation between Cal Maine and Alico

Given the investment horizon of 90 days Cal Maine Foods is expected to generate 0.74 times more return on investment than Alico. However, Cal Maine Foods is 1.35 times less risky than Alico. It trades about 0.29 of its potential returns per unit of risk. Alico Inc is currently generating about -0.05 per unit of risk. If you would invest  7,123  in Cal Maine Foods on August 30, 2024 and sell it today you would earn a total of  2,592  from holding Cal Maine Foods or generate 36.39% return on investment over 90 days.

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

Cal Maine Foods  vs.  Alico Inc

Cal Maine Foods

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Maine Foods are ranked lower than 22 (%) 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.

Alico Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alico Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cal Maine and Alico

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

The idea behind Cal Maine Foods and Alico Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.