Correlation Between COGNA EDUCACAO and CAL MAINE

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

By analyzing existing cross correlation between COGNA EDUCACAO SPADR and CAL MAINE FOODS, you can compare the effects of market volatilities on COGNA EDUCACAO 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 COGNA EDUCACAO with a short position of CAL MAINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of COGNA EDUCACAO and CAL MAINE.

Diversification Opportunities for COGNA EDUCACAO and CAL MAINE

0.03

Correlation Coefficient

COGNA EDUCACAO  CAL MAINE

Significant diversification

The 3 months correlation between COGNA and CAL is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding COGNA EDUCACAO SPADR 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 COGNA EDUCACAO 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 COGNA EDUCACAO SPADR 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 COGNA EDUCACAO i.e., COGNA EDUCACAO and CAL MAINE go up and down completely randomly.

Pair Corralation between COGNA EDUCACAO and CAL MAINE

Assuming the 90 days trading horizon COGNA EDUCACAO is expected to generate 9.78 times less return on investment than CAL MAINE. In addition to that, COGNA EDUCACAO is 7.07 times more volatile than CAL MAINE FOODS. It trades about 0.01 of its total potential returns per unit of risk. CAL MAINE FOODS is currently generating about 0.42 per unit of volatility. If you would invest  6,120  in CAL MAINE FOODS on September 13, 2024 and sell it today you would earn a total of  3,706  from holding CAL MAINE FOODS or generate 60.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

COGNA EDUCACAO SPADR  vs.  CAL MAINE FOODS

COGNA EDUCACAO SPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COGNA EDUCACAO SPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COGNA EDUCACAO is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CAL MAINE FOODS

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CAL MAINE FOODS are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CAL MAINE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COGNA EDUCACAO and CAL MAINE

The main advantage of trading using opposite COGNA EDUCACAO and CAL MAINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COGNA EDUCACAO 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 COGNA EDUCACAO SPADR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.