Correlation Between Champion Iron and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both Champion Iron 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 Champion Iron and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Maple Leaf Foods, you can compare the effects of market volatilities on Champion Iron 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 Champion Iron with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Maple Leaf.
Diversification Opportunities for Champion Iron and Maple Leaf
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Champion and Maple is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron 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 Champion Iron 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 Champion Iron 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 Champion Iron i.e., Champion Iron and Maple Leaf go up and down completely randomly.
Pair Corralation between Champion Iron and Maple Leaf
Assuming the 90 days trading horizon Champion Iron is expected to under-perform the Maple Leaf. In addition to that, Champion Iron is 1.5 times more volatile than Maple Leaf Foods. It trades about -0.03 of its total potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.0 per unit of volatility. If you would invest 2,323 in Maple Leaf Foods on August 26, 2024 and sell it today you would lose (61.00) from holding Maple Leaf Foods or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Maple Leaf Foods
Performance |
| Timeline |
| Champion Iron |
| Maple Leaf Foods |
Champion Iron and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Maple Leaf
The main advantage of trading using opposite Champion Iron and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron 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.| Champion Iron vs. Black Iron | Champion Iron vs. Wesdome Gold Mines | Champion Iron vs. GoGold Resources | Champion Iron vs. Mason Graphite |
| Maple Leaf vs. Saputo Inc | Maple Leaf vs. George Weston Limited | Maple Leaf vs. Empire Company Limited | Maple Leaf vs. Premium Brands Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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