Correlation Between Maple Leaf and First Majestic
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and First Majestic 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 Maple Leaf and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maple Leaf Foods and First Majestic Silver, you can compare the effects of market volatilities on Maple Leaf and First Majestic 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 Maple Leaf with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and First Majestic.
Diversification Opportunities for Maple Leaf and First Majestic
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Maple and First is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Maple Leaf 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 Maple Leaf Foods are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Maple Leaf i.e., Maple Leaf and First Majestic go up and down completely randomly.
Pair Corralation between Maple Leaf and First Majestic
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 0.68 times more return on investment than First Majestic. However, Maple Leaf Foods is 1.48 times less risky than First Majestic. It trades about 0.13 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.3 per unit of risk. If you would invest 2,154 in Maple Leaf Foods on August 26, 2024 and sell it today you would earn a total of 108.00 from holding Maple Leaf Foods or generate 5.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. First Majestic Silver
Performance |
| Timeline |
| Maple Leaf Foods |
| First Majestic Silver |
Maple Leaf and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and First Majestic
The main advantage of trading using opposite Maple Leaf and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| Maple Leaf vs. Saputo Inc | Maple Leaf vs. George Weston Limited | Maple Leaf vs. Empire Company Limited | Maple Leaf vs. Premium Brands Holdings |
| First Majestic vs. Maple Leaf Foods | First Majestic vs. Goodfood Market Corp | First Majestic vs. Queens Road Capital | First Majestic vs. Quisitive Technology Solutions |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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