Correlation Between Maple Leaf and Altair Resources
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Altair Resources 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 Altair Resources 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 Altair Resources, you can compare the effects of market volatilities on Maple Leaf and Altair Resources 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 Altair Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Altair Resources.
Diversification Opportunities for Maple Leaf and Altair Resources
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Maple and Altair is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Altair Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Resources 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 Altair Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair Resources has no effect on the direction of Maple Leaf i.e., Maple Leaf and Altair Resources go up and down completely randomly.
Pair Corralation between Maple Leaf and Altair Resources
Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the Altair Resources. But the stock apears to be less risky and, when comparing its historical volatility, Maple Leaf Foods is 4.07 times less risky than Altair Resources. The stock trades about -0.02 of its potential returns per unit of risk. The Altair Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Altair Resources on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Altair Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Maple Leaf Foods vs. Altair Resources
Performance |
| Timeline |
| Maple Leaf Foods |
| Altair Resources |
Maple Leaf and Altair Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Altair Resources
The main advantage of trading using opposite Maple Leaf and Altair Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Altair Resources 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 Altair Resources will offset losses from the drop in Altair Resources' long position.| Maple Leaf vs. Leons Furniture Limited | Maple Leaf vs. Autocanada | Maple Leaf vs. Exco Technologies Limited |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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