Correlation Between Cal Maine and Repsol SA

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

Diversification Opportunities for Cal Maine and Repsol SA

0.81

Correlation Coefficient

Cal Maine  Repsol SA

Very poor diversification

The 3 months correlation between Cal and Repsol is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Repsol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol SA 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 Repsol SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol SA has no effect on the direction of Cal Maine i.e., Cal Maine and Repsol SA go up and down completely randomly.

Pair Corralation between Cal Maine and Repsol SA

Assuming the 90 days trading horizon Cal Maine is expected to generate 1.43 times less return on investment than Repsol SA. In addition to that, Cal Maine is 1.84 times more volatile than Repsol SA. It trades about 0.16 of its total potential returns per unit of risk. Repsol SA is currently generating about 0.41 per unit of volatility. If you would invest  991.00  in Repsol SA on April 22, 2025 and sell it today you would earn a total of  320.00  from holding Repsol SA or generate 32.29% return on investment over 90 days.

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

Cal Maine Foods  vs.  Repsol SA

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

Repsol SA

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Repsol SA are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Repsol SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cal Maine and Repsol SA

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

The idea behind Cal Maine Foods and Repsol SA 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .