Correlation Between Maple Leaf and ISign Media
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and ISign Media 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 ISign Media 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 iSign Media Solutions, you can compare the effects of market volatilities on Maple Leaf and ISign Media 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 ISign Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and ISign Media.
Diversification Opportunities for Maple Leaf and ISign Media
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Maple and ISign is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and iSign Media Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSign Media Solutions 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 ISign Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSign Media Solutions has no effect on the direction of Maple Leaf i.e., Maple Leaf and ISign Media go up and down completely randomly.
Pair Corralation between Maple Leaf and ISign Media
Assuming the 90 days trading horizon Maple Leaf is expected to generate 188.34 times less return on investment than ISign Media. But when comparing it to its historical volatility, Maple Leaf Foods is 26.43 times less risky than ISign Media. It trades about 0.01 of its potential returns per unit of risk. iSign Media Solutions is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.00 in iSign Media Solutions on September 3, 2024 and sell it today you would earn a total of 1,395 from holding iSign Media Solutions or generate 139500.0% 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. iSign Media Solutions
Performance |
| Timeline |
| Maple Leaf Foods |
| iSign Media Solutions |
Maple Leaf and ISign Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and ISign Media
The main advantage of trading using opposite Maple Leaf and ISign Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, ISign Media 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 ISign Media will offset losses from the drop in ISign Media'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 |
| ISign Media vs. Enghouse Systems | ISign Media vs. Pulse Seismic | ISign Media vs. Harvest Global REIT | ISign Media vs. International Zeolite 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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