Correlation Between Maple Leaf and NextSource Materials
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and NextSource Materials 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 NextSource Materials 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 NextSource Materials, you can compare the effects of market volatilities on Maple Leaf and NextSource Materials 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 NextSource Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and NextSource Materials.
Diversification Opportunities for Maple Leaf and NextSource Materials
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Maple and NextSource is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and NextSource Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextSource Materials 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 NextSource Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextSource Materials has no effect on the direction of Maple Leaf i.e., Maple Leaf and NextSource Materials go up and down completely randomly.
Pair Corralation between Maple Leaf and NextSource Materials
Assuming the 90 days trading horizon Maple Leaf is expected to generate 2.08 times less return on investment than NextSource Materials. But when comparing it to its historical volatility, Maple Leaf Foods is 2.39 times less risky than NextSource Materials. It trades about 0.14 of its potential returns per unit of risk. NextSource Materials is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 80.00 in NextSource Materials on October 25, 2024 and sell it today you would earn a total of 8.00 from holding NextSource Materials or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. NextSource Materials
Performance |
| Timeline |
| Maple Leaf Foods |
| NextSource Materials |
Maple Leaf and NextSource Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and NextSource Materials
The main advantage of trading using opposite Maple Leaf and NextSource Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, NextSource Materials 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 NextSource Materials will offset losses from the drop in NextSource Materials' 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 |
| NextSource Materials vs. Leading Edge Materials | NextSource Materials vs. Northern Graphite | NextSource Materials vs. Lomiko Metals | NextSource Materials vs. Elcora Advanced Materials |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |