Correlation Between Maple Leaf and Canaf Investments
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Canaf Investments 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 Canaf Investments 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 Canaf Investments, you can compare the effects of market volatilities on Maple Leaf and Canaf Investments 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 Canaf Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Canaf Investments.
Diversification Opportunities for Maple Leaf and Canaf Investments
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Maple and Canaf is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments 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 Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of Maple Leaf i.e., Maple Leaf and Canaf Investments go up and down completely randomly.
Pair Corralation between Maple Leaf and Canaf Investments
Assuming the 90 days trading horizon Maple Leaf is expected to generate 3029.0 times less return on investment than Canaf Investments. But when comparing it to its historical volatility, Maple Leaf Foods is 2.14 times less risky than Canaf Investments. It trades about 0.0 of its potential returns per unit of risk. Canaf Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Canaf Investments on September 2, 2024 and sell it today you would earn a total of 13.00 from holding Canaf Investments or generate 81.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. Canaf Investments
Performance |
| Timeline |
| Maple Leaf Foods |
| Canaf Investments |
Maple Leaf and Canaf Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Canaf Investments
The main advantage of trading using opposite Maple Leaf and Canaf Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Canaf Investments 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 Canaf Investments will offset losses from the drop in Canaf Investments' 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 |
| Canaf Investments vs. First Majestic Silver | Canaf Investments vs. Ivanhoe Energy | Canaf Investments vs. Orezone Gold Corp | Canaf Investments vs. Faraday Copper Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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