Correlation Between CAL MAINE and Collins Foods

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

Diversification Opportunities for CAL MAINE and Collins Foods

0.24

Correlation Coefficient

CAL MAINE  Collins Foods

Modest diversification

The 3 months correlation between CAL and Collins is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Collins Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods Limited 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 Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods Limited has no effect on the direction of CAL MAINE i.e., CAL MAINE and Collins Foods go up and down completely randomly.

Pair Corralation between CAL MAINE and Collins Foods

Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 0.68 times more return on investment than Collins Foods. However, CAL MAINE FOODS is 1.47 times less risky than Collins Foods. It trades about 0.18 of its potential returns per unit of risk. Collins Foods Limited is currently generating about 0.08 per unit of risk. If you would invest  7,465  in CAL MAINE FOODS on April 22, 2025 and sell it today you would earn a total of  1,681  from holding CAL MAINE FOODS or generate 22.52% return on investment over 90 days.

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

CAL MAINE FOODS  vs.  Collins Foods Limited

CAL MAINE FOODS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CAL MAINE FOODS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CAL MAINE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Collins Foods Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Collins Foods Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Collins Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAL MAINE and Collins Foods

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

The idea behind CAL MAINE FOODS and Collins Foods Limited 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.