Correlation Between Maple Leaf and Salesforce
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Salesforce 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 Salesforce 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 SalesforceCom CDR, you can compare the effects of market volatilities on Maple Leaf and Salesforce 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 Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Salesforce.
Diversification Opportunities for Maple Leaf and Salesforce
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maple and Salesforce is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR 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 Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalesforceCom CDR has no effect on the direction of Maple Leaf i.e., Maple Leaf and Salesforce go up and down completely randomly.
Pair Corralation between Maple Leaf and Salesforce
Assuming the 90 days trading horizon Maple Leaf is expected to generate 4.95 times less return on investment than Salesforce. But when comparing it to its historical volatility, Maple Leaf Foods is 1.12 times less risky than Salesforce. It trades about 0.05 of its potential returns per unit of risk. SalesforceCom CDR is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,185 in SalesforceCom CDR on August 30, 2024 and sell it today you would earn a total of 447.00 from holding SalesforceCom CDR or generate 20.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. SalesforceCom CDR
Performance |
| Timeline |
| Maple Leaf Foods |
| SalesforceCom CDR |
Maple Leaf and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Salesforce
The main advantage of trading using opposite Maple Leaf and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce'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 |
| Salesforce vs. Stampede Drilling | Salesforce vs. Upstart Investments | Salesforce vs. Quorum Information Technologies | Salesforce vs. Bip Investment 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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