Correlation Between Maple Leaf and Canadian Imperial
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Canadian Imperial 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 Canadian Imperial 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 Canadian Imperial Bank, you can compare the effects of market volatilities on Maple Leaf and Canadian Imperial 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 Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Canadian Imperial.
Diversification Opportunities for Maple Leaf and Canadian Imperial
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Maple and Canadian is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Canadian Imperial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Imperial Bank 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 Canadian Imperial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Imperial Bank has no effect on the direction of Maple Leaf i.e., Maple Leaf and Canadian Imperial go up and down completely randomly.
Pair Corralation between Maple Leaf and Canadian Imperial
Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the Canadian Imperial. In addition to that, Maple Leaf is 2.59 times more volatile than Canadian Imperial Bank. It trades about 0.0 of its total potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.1 per unit of volatility. If you would invest 1,950 in Canadian Imperial Bank on August 29, 2024 and sell it today you would earn a total of 566.00 from holding Canadian Imperial Bank or generate 29.03% 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. Canadian Imperial Bank
Performance |
| Timeline |
| Maple Leaf Foods |
| Canadian Imperial Bank |
Maple Leaf and Canadian Imperial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Canadian Imperial
The main advantage of trading using opposite Maple Leaf and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Canadian Imperial 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 Canadian Imperial will offset losses from the drop in Canadian Imperial's 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 |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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