Correlation Between Maple Leaf and NeuPath Health
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and NeuPath Health 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 NeuPath Health 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 NeuPath Health, you can compare the effects of market volatilities on Maple Leaf and NeuPath Health 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 NeuPath Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and NeuPath Health.
Diversification Opportunities for Maple Leaf and NeuPath Health
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Maple and NeuPath is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and NeuPath Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeuPath 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 NeuPath Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeuPath Health has no effect on the direction of Maple Leaf i.e., Maple Leaf and NeuPath Health go up and down completely randomly.
Pair Corralation between Maple Leaf and NeuPath Health
Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the NeuPath Health. But the stock apears to be less risky and, when comparing its historical volatility, Maple Leaf Foods is 2.81 times less risky than NeuPath Health. The stock trades about -0.01 of its potential returns per unit of risk. The NeuPath Health is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 16.00 in NeuPath Health on August 31, 2024 and sell it today you would earn a total of 1.00 from holding NeuPath Health or generate 6.25% 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. NeuPath Health
Performance |
| Timeline |
| Maple Leaf Foods |
| NeuPath Health |
Maple Leaf and NeuPath Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and NeuPath Health
The main advantage of trading using opposite Maple Leaf and NeuPath Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, NeuPath Health 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 NeuPath Health will offset losses from the drop in NeuPath Health'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 |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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