Correlation Between Link Reservations and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both Link Reservations 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 Link Reservations and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Link Reservations and Maple Leaf Green, you can compare the effects of market volatilities on Link Reservations 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 Link Reservations with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Reservations and Maple Leaf.
Diversification Opportunities for Link Reservations and Maple Leaf
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Link and Maple is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Link Reservations and Maple Leaf Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Green and Link Reservations 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 Link Reservations 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 Green has no effect on the direction of Link Reservations i.e., Link Reservations and Maple Leaf go up and down completely randomly.
Pair Corralation between Link Reservations and Maple Leaf
Given the investment horizon of 90 days Link Reservations is expected to generate 1.39 times more return on investment than Maple Leaf. However, Link Reservations is 1.39 times more volatile than Maple Leaf Green. It trades about 0.1 of its potential returns per unit of risk. Maple Leaf Green is currently generating about 0.09 per unit of risk. If you would invest 0.20 in Link Reservations on August 25, 2024 and sell it today you would lose (0.10) from holding Link Reservations or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Link Reservations vs. Maple Leaf Green
Performance |
| Timeline |
| Link Reservations |
| Maple Leaf Green |
Link Reservations and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Link Reservations and Maple Leaf
The main advantage of trading using opposite Link Reservations and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Link Reservations 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.| Link Reservations vs. Element Solutions | Link Reservations vs. Orion Engineered Carbons | Link Reservations vs. Minerals Technologies | Link Reservations vs. Ingevity Corp |
| Maple Leaf vs. Greater Cannabis | Maple Leaf vs. Global Hemp Group | Maple Leaf vs. Cannabis Suisse Corp | Maple Leaf vs. Mc Endvrs |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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