Correlation Between Maple Leaf and Fidelity Minerals
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Fidelity Minerals 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 Fidelity Minerals 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 Fidelity Minerals Corp, you can compare the effects of market volatilities on Maple Leaf and Fidelity Minerals 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 Fidelity Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Fidelity Minerals.
Diversification Opportunities for Maple Leaf and Fidelity Minerals
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Maple and Fidelity is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Fidelity Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Minerals Corp 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 Fidelity Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Minerals Corp has no effect on the direction of Maple Leaf i.e., Maple Leaf and Fidelity Minerals go up and down completely randomly.
Pair Corralation between Maple Leaf and Fidelity Minerals
Assuming the 90 days trading horizon Maple Leaf is expected to generate 37.15 times less return on investment than Fidelity Minerals. But when comparing it to its historical volatility, Maple Leaf Foods is 9.14 times less risky than Fidelity Minerals. It trades about 0.01 of its potential returns per unit of risk. Fidelity Minerals Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Fidelity Minerals Corp on September 5, 2024 and sell it today you would lose (1.50) from holding Fidelity Minerals Corp or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. Fidelity Minerals Corp
Performance |
| Timeline |
| Maple Leaf Foods |
| Fidelity Minerals Corp |
Maple Leaf and Fidelity Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Fidelity Minerals
The main advantage of trading using opposite Maple Leaf and Fidelity Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Fidelity Minerals 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 Fidelity Minerals will offset losses from the drop in Fidelity Minerals' 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 |
| Fidelity Minerals vs. Air Canada | Fidelity Minerals vs. Rocky Mountain Liquor | Fidelity Minerals vs. Maple Leaf Foods | Fidelity Minerals vs. Wilmington Capital Management |
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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