Correlation Between Maple Leaf and Champion Iron
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Champion Iron 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 Champion Iron 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 Champion Iron, you can compare the effects of market volatilities on Maple Leaf and Champion Iron 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 Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Champion Iron.
Diversification Opportunities for Maple Leaf and Champion Iron
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Maple and Champion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron 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 Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of Maple Leaf i.e., Maple Leaf and Champion Iron go up and down completely randomly.
Pair Corralation between Maple Leaf and Champion Iron
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 0.69 times more return on investment than Champion Iron. However, Maple Leaf Foods is 1.46 times less risky than Champion Iron. It trades about 0.05 of its potential returns per unit of risk. Champion Iron is currently generating about -0.22 per unit of risk. If you would invest 2,215 in Maple Leaf Foods on August 30, 2024 and sell it today you would earn a total of 75.00 from holding Maple Leaf Foods or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. Champion Iron
Performance |
| Timeline |
| Maple Leaf Foods |
| Champion Iron |
Maple Leaf and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Champion Iron
The main advantage of trading using opposite Maple Leaf and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.| Maple Leaf vs. Leons Furniture Limited | Maple Leaf vs. Autocanada | Maple Leaf vs. Premium Brands Holdings | Maple Leaf vs. Exco Technologies Limited |
| Champion Iron vs. Arizona Sonoran Copper | Champion Iron vs. Filo Mining Corp | Champion Iron vs. Marimaca Copper Corp | Champion Iron vs. iShares Canadian HYBrid |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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