Correlation Between Maple Leaf and Lycos Energy
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Lycos Energy 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 Lycos Energy 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 Lycos Energy, you can compare the effects of market volatilities on Maple Leaf and Lycos Energy 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 Lycos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Lycos Energy.
Diversification Opportunities for Maple Leaf and Lycos Energy
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maple and Lycos is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Lycos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lycos Energy 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 Lycos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lycos Energy has no effect on the direction of Maple Leaf i.e., Maple Leaf and Lycos Energy go up and down completely randomly.
Pair Corralation between Maple Leaf and Lycos Energy
Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the Lycos Energy. But the stock apears to be less risky and, when comparing its historical volatility, Maple Leaf Foods is 18.4 times less risky than Lycos Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Lycos Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 416.00 in Lycos Energy on October 29, 2024 and sell it today you would lose (179.00) from holding Lycos Energy or give up 43.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Maple Leaf Foods vs. Lycos Energy
Performance |
| Timeline |
| Maple Leaf Foods |
| Lycos Energy |
Maple Leaf and Lycos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Lycos Energy
The main advantage of trading using opposite Maple Leaf and Lycos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Lycos Energy 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 Lycos Energy will offset losses from the drop in Lycos Energy'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 |
| Lycos Energy vs. Micron Technology, | Lycos Energy vs. Canaf Investments | Lycos Energy vs. Upstart Investments | Lycos Energy vs. Economic Investment Trust |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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