Correlation Between Maple Leaf and Electra Battery
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Electra Battery 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 Electra Battery 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 Electra Battery Materials, you can compare the effects of market volatilities on Maple Leaf and Electra Battery 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 Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Electra Battery.
Diversification Opportunities for Maple Leaf and Electra Battery
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Maple and Electra is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Electra Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Battery 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 Electra Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Battery Materials has no effect on the direction of Maple Leaf i.e., Maple Leaf and Electra Battery go up and down completely randomly.
Pair Corralation between Maple Leaf and Electra Battery
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 0.74 times more return on investment than Electra Battery. However, Maple Leaf Foods is 1.34 times less risky than Electra Battery. It trades about 0.15 of its potential returns per unit of risk. Electra Battery Materials is currently generating about -0.1 per unit of risk. If you would invest 2,146 in Maple Leaf Foods on August 29, 2024 and sell it today you would earn a total of 144.00 from holding Maple Leaf Foods or generate 6.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. Electra Battery Materials
Performance |
| Timeline |
| Maple Leaf Foods |
| Electra Battery Materials |
Maple Leaf and Electra Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Electra Battery
The main advantage of trading using opposite Maple Leaf and Electra Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Electra Battery 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 Electra Battery will offset losses from the drop in Electra Battery's long position.| Maple Leaf vs. Amazon CDR | Maple Leaf vs. Apple Inc CDR | Maple Leaf vs. Alphabet Inc CDR | Maple Leaf vs. Walmart Inc CDR |
| Electra Battery vs. Frontier Lithium | Electra Battery vs. Electra Battery Materials | Electra Battery vs. E3 Lithium | Electra Battery vs. Canada Nickel |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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