Correlation Between Maple Leaf and Aluula Composites
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Aluula Composites 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 Aluula Composites 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 Aluula Composites, you can compare the effects of market volatilities on Maple Leaf and Aluula Composites 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 Aluula Composites. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Aluula Composites.
Diversification Opportunities for Maple Leaf and Aluula Composites
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Maple and Aluula is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Aluula Composites in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluula Composites 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 Aluula Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluula Composites has no effect on the direction of Maple Leaf i.e., Maple Leaf and Aluula Composites go up and down completely randomly.
Pair Corralation between Maple Leaf and Aluula Composites
Assuming the 90 days trading horizon Maple Leaf is expected to generate 1.25 times less return on investment than Aluula Composites. But when comparing it to its historical volatility, Maple Leaf Foods is 1.61 times less risky than Aluula Composites. It trades about 0.33 of its potential returns per unit of risk. Aluula Composites is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Aluula Composites on November 29, 2024 and sell it today you would earn a total of 1.50 from holding Aluula Composites or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Maple Leaf Foods vs. Aluula Composites
Performance |
| Timeline |
| Maple Leaf Foods |
| Aluula Composites |
Maple Leaf and Aluula Composites Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Aluula Composites
The main advantage of trading using opposite Maple Leaf and Aluula Composites positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Aluula Composites 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 Aluula Composites will offset losses from the drop in Aluula Composites' 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 |
| Aluula Composites vs. Rogers Communications | Aluula Composites vs. Canadian Utilities Limited | Aluula Composites vs. Verizon Communications CDR | Aluula Composites vs. Computer Modelling Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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