Correlation Between Maple Leaf and Nova Leap
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Nova Leap 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 Nova Leap 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 Nova Leap Health, you can compare the effects of market volatilities on Maple Leaf and Nova Leap 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 Nova Leap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Nova Leap.
Diversification Opportunities for Maple Leaf and Nova Leap
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Maple and Nova is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Nova Leap Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Leap Health 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 Nova Leap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Leap Health has no effect on the direction of Maple Leaf i.e., Maple Leaf and Nova Leap go up and down completely randomly.
Pair Corralation between Maple Leaf and Nova Leap
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 0.73 times more return on investment than Nova Leap. However, Maple Leaf Foods is 1.37 times less risky than Nova Leap. It trades about 0.12 of its potential returns per unit of risk. Nova Leap Health is currently generating about -0.12 per unit of risk. If you would invest 2,036 in Maple Leaf Foods on November 3, 2024 and sell it today you would earn a total of 100.00 from holding Maple Leaf Foods or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Maple Leaf Foods vs. Nova Leap Health
Performance |
| Timeline |
| Maple Leaf Foods |
| Nova Leap Health |
Maple Leaf and Nova Leap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Nova Leap
The main advantage of trading using opposite Maple Leaf and Nova Leap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Nova Leap 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 Nova Leap will offset losses from the drop in Nova Leap'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 |
| Nova Leap vs. ESE Entertainment | Nova Leap vs. Therma Bright | Nova Leap vs. iShares Canadian HYBrid | Nova Leap vs. Altagas Cum Red |
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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