Correlation Between Maple Leaf and HPQ Silicon
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and HPQ Silicon 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 HPQ Silicon 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 HPQ Silicon Resources, you can compare the effects of market volatilities on Maple Leaf and HPQ Silicon 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 HPQ Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and HPQ Silicon.
Diversification Opportunities for Maple Leaf and HPQ Silicon
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Maple and HPQ is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and HPQ Silicon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HPQ Silicon Resources 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 HPQ Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HPQ Silicon Resources has no effect on the direction of Maple Leaf i.e., Maple Leaf and HPQ Silicon go up and down completely randomly.
Pair Corralation between Maple Leaf and HPQ Silicon
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 0.43 times more return on investment than HPQ Silicon. However, Maple Leaf Foods is 2.32 times less risky than HPQ Silicon. It trades about 0.18 of its potential returns per unit of risk. HPQ Silicon Resources is currently generating about -0.22 per unit of risk. If you would invest 2,106 in Maple Leaf Foods on September 1, 2024 and sell it today you would earn a total of 169.00 from holding Maple Leaf Foods or generate 8.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. HPQ Silicon Resources
Performance |
| Timeline |
| Maple Leaf Foods |
| HPQ Silicon Resources |
Maple Leaf and HPQ Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and HPQ Silicon
The main advantage of trading using opposite Maple Leaf and HPQ Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, HPQ Silicon 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 HPQ Silicon will offset losses from the drop in HPQ Silicon'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 |
| HPQ Silicon vs. Kiplin Metals | HPQ Silicon vs. Pure Energy Minerals | HPQ Silicon vs. Noram Lithium Corp | HPQ Silicon vs. Minnova 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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