Correlation Between Maple Leaf and MTY Food
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and MTY Food 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 MTY Food 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 MTY Food Group, you can compare the effects of market volatilities on Maple Leaf and MTY Food 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 MTY Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and MTY Food.
Diversification Opportunities for Maple Leaf and MTY Food
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maple and MTY is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and MTY Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTY Food 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 MTY Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTY Food Group has no effect on the direction of Maple Leaf i.e., Maple Leaf and MTY Food go up and down completely randomly.
Pair Corralation between Maple Leaf and MTY Food
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 1.18 times more return on investment than MTY Food. However, Maple Leaf is 1.18 times more volatile than MTY Food Group. It trades about 0.19 of its potential returns per unit of risk. MTY Food Group is currently generating about 0.11 per unit of risk. If you would invest 2,135 in Maple Leaf Foods on August 31, 2024 and sell it today you would earn a total of 178.00 from holding Maple Leaf Foods or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. MTY Food Group
Performance |
| Timeline |
| Maple Leaf Foods |
| MTY Food Group |
Maple Leaf and MTY Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and MTY Food
The main advantage of trading using opposite Maple Leaf and MTY Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, MTY Food 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 MTY Food will offset losses from the drop in MTY Food's long position.| Maple Leaf vs. Saputo Inc | Maple Leaf vs. Forstrong Global Income | Maple Leaf vs. iShares Canadian HYBrid | Maple Leaf vs. Brompton European Dividend |
| MTY Food vs. Berkshire Hathaway CDR | MTY Food vs. JPMorgan Chase Co | MTY Food vs. Bank of America | MTY Food vs. Alphabet Inc CDR |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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