Correlation Between AM EAGLE and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both AM EAGLE 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 AM EAGLE and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AM EAGLE OUTFITTERS and Maple Leaf Foods, you can compare the effects of market volatilities on AM EAGLE 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 AM EAGLE with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and Maple Leaf.
Diversification Opportunities for AM EAGLE and Maple Leaf
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AFG and Maple is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS 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 AM EAGLE 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 AM EAGLE OUTFITTERS 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 AM EAGLE i.e., AM EAGLE and Maple Leaf go up and down completely randomly.
Pair Corralation between AM EAGLE and Maple Leaf
Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to under-perform the Maple Leaf. In addition to that, AM EAGLE is 1.8 times more volatile than Maple Leaf Foods. It trades about -0.04 of its total potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.04 per unit of volatility. If you would invest 1,489 in Maple Leaf Foods on September 14, 2024 and sell it today you would earn a total of 21.00 from holding Maple Leaf Foods or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AM EAGLE OUTFITTERS vs. Maple Leaf Foods
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| Maple Leaf Foods |
AM EAGLE and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and Maple Leaf
The main advantage of trading using opposite AM EAGLE and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE 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.The idea behind AM EAGLE OUTFITTERS and Maple Leaf 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.| Maple Leaf vs. NISSAN CHEMICAL IND | Maple Leaf vs. Lendlease Group | Maple Leaf vs. China BlueChemical | Maple Leaf vs. AM EAGLE OUTFITTERS |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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