Correlation Between Maple Leaf and Premium Brands
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Premium Brands 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 Premium Brands 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 Premium Brands Holdings, you can compare the effects of market volatilities on Maple Leaf and Premium Brands 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 Premium Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Premium Brands.
Diversification Opportunities for Maple Leaf and Premium Brands
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Maple and Premium is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Premium Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Brands Holdings 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 Premium Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Brands Holdings has no effect on the direction of Maple Leaf i.e., Maple Leaf and Premium Brands go up and down completely randomly.
Pair Corralation between Maple Leaf and Premium Brands
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 2.63 times more return on investment than Premium Brands. However, Maple Leaf is 2.63 times more volatile than Premium Brands Holdings. It trades about 0.09 of its potential returns per unit of risk. Premium Brands Holdings is currently generating about -0.04 per unit of risk. If you would invest 2,032 in Maple Leaf Foods on October 22, 2024 and sell it today you would earn a total of 72.00 from holding Maple Leaf Foods or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. Premium Brands Holdings
Performance |
| Timeline |
| Maple Leaf Foods |
| Premium Brands Holdings |
Maple Leaf and Premium Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Premium Brands
The main advantage of trading using opposite Maple Leaf and Premium Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Premium Brands 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 Premium Brands will offset losses from the drop in Premium Brands' 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 |
| Premium Brands vs. CCL Industries | Premium Brands vs. North West | Premium Brands vs. Maple Leaf Foods | Premium Brands vs. FirstService Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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