Correlation Between Cal Maine and Local Bounti

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

Diversification Opportunities for Cal Maine and Local Bounti

0.66

Correlation Coefficient

Cal Maine  Local Bounti

Poor diversification

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

Pair Corralation between Cal Maine and Local Bounti

Given the investment horizon of 90 days Cal Maine is expected to generate 1.69 times less return on investment than Local Bounti. But when comparing it to its historical volatility, Cal Maine Foods is 2.1 times less risky than Local Bounti. It trades about 0.07 of its potential returns per unit of risk. Local Bounti Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  242.00  in Local Bounti Corp on May 7, 2025 and sell it today you would earn a total of  28.00  from holding Local Bounti Corp or generate 11.57% 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.  Local Bounti Corp

Cal Maine Foods

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Maine Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Cal Maine displayed solid returns over the last few months and may actually be approaching a breakup point.

Local Bounti Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Local Bounti Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Local Bounti disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cal Maine and Local Bounti

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

The idea behind Cal Maine Foods and Local Bounti Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.