Correlation Between Maple Leaf and International Business
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on Maple Leaf and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and International Business.
Diversification Opportunities for Maple Leaf and International Business
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Maple and International is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Maple Leaf i.e., Maple Leaf and International Business go up and down completely randomly.
Pair Corralation between Maple Leaf and International Business
Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the International Business. In addition to that, Maple Leaf is 1.36 times more volatile than International Business Machines. It trades about -0.05 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.11 per unit of volatility. If you would invest 2,914 in International Business Machines on October 26, 2024 and sell it today you would earn a total of 530.00 from holding International Business Machines or generate 18.19% 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. International Business Machine
Performance |
| Timeline |
| Maple Leaf Foods |
| International Business |
Maple Leaf and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and International Business
The main advantage of trading using opposite Maple Leaf and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' 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 |
| International Business vs. Chemtrade Logistics Income | International Business vs. TGS Esports | International Business vs. Maple Leaf Foods | International Business vs. Computer Modelling Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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