Correlation Between Maple Leaf and Arizona Metals
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Arizona Metals 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 Arizona Metals 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 Arizona Metals Corp, you can compare the effects of market volatilities on Maple Leaf and Arizona Metals 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 Arizona Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Arizona Metals.
Diversification Opportunities for Maple Leaf and Arizona Metals
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Maple and Arizona is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Arizona Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Metals Corp 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 Arizona Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Metals Corp has no effect on the direction of Maple Leaf i.e., Maple Leaf and Arizona Metals go up and down completely randomly.
Pair Corralation between Maple Leaf and Arizona Metals
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 0.45 times more return on investment than Arizona Metals. However, Maple Leaf Foods is 2.24 times less risky than Arizona Metals. It trades about -0.01 of its potential returns per unit of risk. Arizona Metals Corp is currently generating about -0.02 per unit of risk. If you would invest 2,528 in Maple Leaf Foods on August 31, 2024 and sell it today you would lose (253.00) from holding Maple Leaf Foods or give up 10.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. Arizona Metals Corp
Performance |
| Timeline |
| Maple Leaf Foods |
| Arizona Metals Corp |
Maple Leaf and Arizona Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Arizona Metals
The main advantage of trading using opposite Maple Leaf and Arizona Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Arizona Metals 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 Arizona Metals will offset losses from the drop in Arizona Metals' long position.| Maple Leaf vs. Saputo Inc | Maple Leaf vs. Forstrong Global Income | Maple Leaf vs. iShares Canadian HYBrid | Maple Leaf vs. Brompton European Dividend |
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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.
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