Correlation Between ECHO INVESTMENT and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both ECHO INVESTMENT and Maple Leaf 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 ECHO INVESTMENT and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECHO INVESTMENT ZY and Maple Leaf Foods, you can compare the effects of market volatilities on ECHO INVESTMENT and Maple Leaf 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 ECHO INVESTMENT with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and Maple Leaf.
Diversification Opportunities for ECHO INVESTMENT and Maple Leaf
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ECHO and Maple is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and Maple Leaf Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Foods and ECHO INVESTMENT 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 ECHO INVESTMENT ZY are associated (or correlated) with Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Foods has no effect on the direction of ECHO INVESTMENT i.e., ECHO INVESTMENT and Maple Leaf go up and down completely randomly.
Pair Corralation between ECHO INVESTMENT and Maple Leaf
Assuming the 90 days horizon ECHO INVESTMENT ZY is expected to generate 1.55 times more return on investment than Maple Leaf. However, ECHO INVESTMENT is 1.55 times more volatile than Maple Leaf Foods. It trades about 0.05 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about -0.01 per unit of risk. If you would invest 75.00 in ECHO INVESTMENT ZY on September 12, 2024 and sell it today you would earn a total of 27.00 from holding ECHO INVESTMENT ZY or generate 36.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
ECHO INVESTMENT ZY vs. Maple Leaf Foods
Performance |
| Timeline |
| ECHO INVESTMENT ZY |
| Maple Leaf Foods |
ECHO INVESTMENT and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECHO INVESTMENT and Maple Leaf
The main advantage of trading using opposite ECHO INVESTMENT and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECHO INVESTMENT position performs unexpectedly, Maple Leaf 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 Maple Leaf will offset losses from the drop in Maple Leaf's long position.| ECHO INVESTMENT vs. OPEN HOUSE GROUP | ECHO INVESTMENT vs. Superior Plus Corp | ECHO INVESTMENT vs. SIVERS SEMICONDUCTORS AB | ECHO INVESTMENT vs. CHINA HUARONG ENERHD 50 |
| Maple Leaf vs. TOREX SEMICONDUCTOR LTD | Maple Leaf vs. Marie Brizard Wine | Maple Leaf vs. Magnachip Semiconductor | Maple Leaf vs. ECHO INVESTMENT ZY |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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