Correlation Between INFORMATION SVC and Cal Maine

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

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

Diversification Opportunities for INFORMATION SVC and Cal Maine

0.53

Correlation Coefficient

INFORMATION SVC  Cal Maine

Very weak diversification

The 3 months correlation between INFORMATION and Cal is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP 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 INFORMATION SVC 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 INFORMATION SVC GRP 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 INFORMATION SVC i.e., INFORMATION SVC and Cal Maine go up and down completely randomly.

Pair Corralation between INFORMATION SVC and Cal Maine

Assuming the 90 days horizon INFORMATION SVC is expected to generate 2.8 times less return on investment than Cal Maine. In addition to that, INFORMATION SVC is 1.12 times more volatile than Cal Maine Foods. It trades about 0.09 of its total potential returns per unit of risk. Cal Maine Foods is currently generating about 0.29 per unit of volatility. If you would invest  6,328  in Cal Maine Foods on September 3, 2024 and sell it today you would earn a total of  2,812  from holding Cal Maine Foods or generate 44.44% return on investment over 90 days.

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

INFORMATION SVC GRP  vs.  Cal Maine Foods

INFORMATION SVC GRP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INFORMATION SVC GRP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, INFORMATION SVC reported solid returns over the last few months and may actually be approaching a breakup point.

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 comparatively fragile basic indicators, Cal Maine unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INFORMATION SVC and Cal Maine

The main advantage of trading using opposite INFORMATION SVC and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC 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 INFORMATION SVC GRP 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.