Correlation Between Meta Financial and Cal Maine

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

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

Diversification Opportunities for Meta Financial and Cal Maine

-0.05

Correlation Coefficient

Meta Financial  Cal Maine

Good diversification

The 3 months correlation between Meta and Cal is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Meta Financial Group 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 Meta Financial 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 Meta Financial Group 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 Meta Financial i.e., Meta Financial and Cal Maine go up and down completely randomly.

Pair Corralation between Meta Financial and Cal Maine

Assuming the 90 days horizon Meta Financial is expected to generate 1.31 times less return on investment than Cal Maine. But when comparing it to its historical volatility, Meta Financial Group is 1.06 times less risky than Cal Maine. It trades about 0.12 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  7,473  in Cal Maine Foods on April 21, 2025 and sell it today you would earn a total of  1,671  from holding Cal Maine Foods or generate 22.36% return on investment over 90 days.

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

Meta Financial Group  vs.  Cal Maine Foods

Meta Financial Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Financial Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Meta Financial reported solid returns over the last few months and may actually be approaching a breakup point.

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 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cal Maine reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meta Financial and Cal Maine

The main advantage of trading using opposite Meta Financial and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Financial 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 Meta Financial Group 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.