Correlation Between CI Financial and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both CI Financial 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 CI Financial and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Financial Corp and Maple Leaf Foods, you can compare the effects of market volatilities on CI Financial 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 CI Financial with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Financial and Maple Leaf.
Diversification Opportunities for CI Financial and Maple Leaf
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between CIX and Maple is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp 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 CI Financial 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 CI Financial Corp 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 CI Financial i.e., CI Financial and Maple Leaf go up and down completely randomly.
Pair Corralation between CI Financial and Maple Leaf
Assuming the 90 days trading horizon CI Financial Corp is expected to generate 1.45 times more return on investment than Maple Leaf. However, CI Financial is 1.45 times more volatile than Maple Leaf Foods. It trades about 0.16 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about -0.04 per unit of risk. If you would invest 1,265 in CI Financial Corp on October 18, 2024 and sell it today you would earn a total of 1,843 from holding CI Financial Corp or generate 145.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Financial Corp vs. Maple Leaf Foods
Performance |
| Timeline |
| CI Financial Corp |
| Maple Leaf Foods |
CI Financial and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Financial and Maple Leaf
The main advantage of trading using opposite CI Financial and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Financial 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.| CI Financial vs. IGM Financial | CI Financial vs. iA Financial | CI Financial vs. Canadian Western Bank | CI Financial vs. Great West Lifeco |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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