Correlation Between Maple Leaf and KDA
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and KDA 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 KDA 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 KDA Group, you can compare the effects of market volatilities on Maple Leaf and KDA 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 KDA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and KDA.
Diversification Opportunities for Maple Leaf and KDA
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Maple and KDA is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group 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 KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of Maple Leaf i.e., Maple Leaf and KDA go up and down completely randomly.
Pair Corralation between Maple Leaf and KDA
Assuming the 90 days trading horizon Maple Leaf is expected to generate 24.89 times less return on investment than KDA. But when comparing it to its historical volatility, Maple Leaf Foods is 3.65 times less risky than KDA. It trades about 0.01 of its potential returns per unit of risk. KDA Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9.00 in KDA Group on September 3, 2024 and sell it today you would earn a total of 18.00 from holding KDA Group or generate 200.0% 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. KDA Group
Performance |
| Timeline |
| Maple Leaf Foods |
| KDA Group |
Maple Leaf and KDA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and KDA
The main advantage of trading using opposite Maple Leaf and KDA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, KDA 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 KDA will offset losses from the drop in KDA'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 |
| KDA vs. Air Canada | KDA vs. Algoma Steel Group | KDA vs. Maple Leaf Foods | KDA vs. Brookfield Office Properties |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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