Correlation Between CAL MAINE and Carsales

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

Diversification Opportunities for CAL MAINE and Carsales

0.66

Correlation Coefficient

CAL MAINE  Carsales

Poor diversification

The 3 months correlation between CAL and Carsales is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of CAL MAINE i.e., CAL MAINE and Carsales go up and down completely randomly.

Pair Corralation between CAL MAINE and Carsales

Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 1.11 times more return on investment than Carsales. However, CAL MAINE is 1.11 times more volatile than CarsalesCom. It trades about 0.16 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.1 per unit of risk. If you would invest  7,833  in CAL MAINE FOODS on April 25, 2025 and sell it today you would earn a total of  1,443  from holding CAL MAINE FOODS or generate 18.42% return on investment over 90 days.

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

CAL MAINE FOODS  vs.  CarsalesCom

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 12 (%) 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.

CarsalesCom

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Carsales may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CAL MAINE and Carsales

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

The idea behind CAL MAINE FOODS and CarsalesCom 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.