Correlation Between Apple and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Maple Leaf Foods, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Maple Leaf.
Diversification Opportunities for Apple and Maple Leaf
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and Maple is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Maple Leaf go up and down completely randomly.
Pair Corralation between Apple and Maple Leaf
Assuming the 90 days trading horizon Apple Inc is expected to under-perform the Maple Leaf. In addition to that, Apple is 1.05 times more volatile than Maple Leaf Foods. It trades about -0.05 of its total potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.06 per unit of volatility. If you would invest 1,380 in Maple Leaf Foods on November 4, 2024 and sell it today you would earn a total of 30.00 from holding Maple Leaf Foods or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Maple Leaf Foods
Performance |
| Timeline |
| Apple Inc |
| Maple Leaf Foods |
Apple and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Maple Leaf
The main advantage of trading using opposite Apple and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Constellation Software | Apple vs. MAVEN WIRELESS SWEDEN | Apple vs. VIRGIN WINES UK | Apple vs. ITALIAN WINE BRANDS |
| Maple Leaf vs. Australian Agricultural | Maple Leaf vs. Sumitomo Mitsui Construction | Maple Leaf vs. NTG Nordic Transport | Maple Leaf vs. China Railway Construction |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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