Correlation Between Maple Leaf and Financial
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Financial 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 Financial 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 Financial 15 Split, you can compare the effects of market volatilities on Maple Leaf and Financial 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 Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Financial.
Diversification Opportunities for Maple Leaf and Financial
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Maple and Financial is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split 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 Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of Maple Leaf i.e., Maple Leaf and Financial go up and down completely randomly.
Pair Corralation between Maple Leaf and Financial
Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the Financial. In addition to that, Maple Leaf is 6.44 times more volatile than Financial 15 Split. It trades about 0.0 of its total potential returns per unit of risk. Financial 15 Split is currently generating about 0.22 per unit of volatility. If you would invest 836.00 in Financial 15 Split on August 29, 2024 and sell it today you would earn a total of 229.00 from holding Financial 15 Split or generate 27.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. Financial 15 Split
Performance |
| Timeline |
| Maple Leaf Foods |
| Financial 15 Split |
Maple Leaf and Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Financial
The main advantage of trading using opposite Maple Leaf and Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Financial 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 Financial will offset losses from the drop in Financial'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 |
| Financial vs. North American Financial | Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. Dividend 15 Split |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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