Correlation Between JAPAN AIRLINES and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES 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 JAPAN AIRLINES and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and Maple Leaf Foods, you can compare the effects of market volatilities on JAPAN AIRLINES 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 JAPAN AIRLINES with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and Maple Leaf.
Diversification Opportunities for JAPAN AIRLINES and Maple Leaf
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JAPAN and Maple is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES i.e., JAPAN AIRLINES and Maple Leaf go up and down completely randomly.
Pair Corralation between JAPAN AIRLINES and Maple Leaf
Assuming the 90 days trading horizon JAPAN AIRLINES is expected to under-perform the Maple Leaf. But the stock apears to be less risky and, when comparing its historical volatility, JAPAN AIRLINES is 1.5 times less risky than Maple Leaf. The stock trades about -0.01 of its potential returns per unit of risk. The Maple Leaf Foods is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,645 in Maple Leaf Foods on November 4, 2024 and sell it today you would lose (235.00) from holding Maple Leaf Foods or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN AIRLINES vs. Maple Leaf Foods
Performance |
| Timeline |
| JAPAN AIRLINES |
| Maple Leaf Foods |
JAPAN AIRLINES and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN AIRLINES and Maple Leaf
The main advantage of trading using opposite JAPAN AIRLINES and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES 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.| JAPAN AIRLINES vs. TRADEDOUBLER AB SK | JAPAN AIRLINES vs. BJs Wholesale Club | JAPAN AIRLINES vs. Costco Wholesale Corp | JAPAN AIRLINES vs. Fast Retailing Co |
| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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