Correlation Between Economic Investment and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both Economic 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 Economic 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 Economic Investment Trust and Maple Leaf Foods, you can compare the effects of market volatilities on Economic 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 Economic Investment with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Economic Investment and Maple Leaf.
Diversification Opportunities for Economic Investment and Maple Leaf
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Economic and Maple is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Economic Investment Trust 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 Economic 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 Economic Investment Trust 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 Economic Investment i.e., Economic Investment and Maple Leaf go up and down completely randomly.
Pair Corralation between Economic Investment and Maple Leaf
Assuming the 90 days trading horizon Economic Investment is expected to generate 1.61 times less return on investment than Maple Leaf. But when comparing it to its historical volatility, Economic Investment Trust is 3.17 times less risky than Maple Leaf. It trades about 0.41 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,146 in Maple Leaf Foods on August 28, 2024 and sell it today you would earn a total of 188.00 from holding Maple Leaf Foods or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Economic Investment Trust vs. Maple Leaf Foods
Performance |
| Timeline |
| Economic Investment Trust |
| Maple Leaf Foods |
Economic Investment and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Economic Investment and Maple Leaf
The main advantage of trading using opposite Economic Investment and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Economic 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.| Economic Investment vs. Uniteds Limited | Economic Investment vs. E L Financial Corp | Economic Investment vs. Canadian General Investments | Economic Investment vs. Clairvest Group |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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