Correlation Between Maple Leaf and Doman Building
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Doman Building 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 Doman Building 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 Doman Building Materials, you can compare the effects of market volatilities on Maple Leaf and Doman Building 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 Doman Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Doman Building.
Diversification Opportunities for Maple Leaf and Doman Building
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Maple and Doman is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Doman Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doman Building Materials 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 Doman Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doman Building Materials has no effect on the direction of Maple Leaf i.e., Maple Leaf and Doman Building go up and down completely randomly.
Pair Corralation between Maple Leaf and Doman Building
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 1.24 times more return on investment than Doman Building. However, Maple Leaf is 1.24 times more volatile than Doman Building Materials. It trades about 0.14 of its potential returns per unit of risk. Doman Building Materials is currently generating about -0.25 per unit of risk. If you would invest 2,031 in Maple Leaf Foods on October 25, 2024 and sell it today you would earn a total of 112.00 from holding Maple Leaf Foods or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. Doman Building Materials
Performance |
| Timeline |
| Maple Leaf Foods |
| Doman Building Materials |
Maple Leaf and Doman Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Doman Building
The main advantage of trading using opposite Maple Leaf and Doman Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Doman Building 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 Doman Building will offset losses from the drop in Doman Building'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 |
| Doman Building vs. Toromont Industries | Doman Building vs. Ritchie Bros Auctioneers | Doman Building vs. Stantec | Doman Building vs. Transcontinental |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Global Correlations Find global opportunities by holding instruments from different markets |