Correlation Between Major Drilling and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both Major Drilling 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 Major Drilling and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and Maple Leaf Foods, you can compare the effects of market volatilities on Major Drilling 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 Major Drilling with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Maple Leaf.
Diversification Opportunities for Major Drilling and Maple Leaf
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Major and Maple is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group 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 Major Drilling 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 Major Drilling Group 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 Major Drilling i.e., Major Drilling and Maple Leaf go up and down completely randomly.
Pair Corralation between Major Drilling and Maple Leaf
Assuming the 90 days trading horizon Major Drilling Group is expected to generate 1.1 times more return on investment than Maple Leaf. However, Major Drilling is 1.1 times more volatile than Maple Leaf Foods. It trades about 0.08 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about -0.03 per unit of risk. If you would invest 840.00 in Major Drilling Group on September 15, 2024 and sell it today you would earn a total of 24.00 from holding Major Drilling Group or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. Maple Leaf Foods
Performance |
| Timeline |
| Major Drilling Group |
| Maple Leaf Foods |
Major Drilling and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Maple Leaf
The main advantage of trading using opposite Major Drilling and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling 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.| Major Drilling vs. Foraco International SA | Major Drilling vs. Geodrill Limited | Major Drilling vs. Bri Chem Corp |
| Maple Leaf vs. Leons Furniture Limited | Maple Leaf vs. Autocanada | Maple Leaf vs. Exco Technologies Limited |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |