Correlation Between Maple Leaf and Queens Road
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Queens Road 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 Queens Road 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 Queens Road Capital, you can compare the effects of market volatilities on Maple Leaf and Queens Road 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 Queens Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Queens Road.
Diversification Opportunities for Maple Leaf and Queens Road
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Maple and Queens is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Queens Road Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Queens Road Capital 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 Queens Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Queens Road Capital has no effect on the direction of Maple Leaf i.e., Maple Leaf and Queens Road go up and down completely randomly.
Pair Corralation between Maple Leaf and Queens Road
Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the Queens Road. But the stock apears to be less risky and, when comparing its historical volatility, Maple Leaf Foods is 1.57 times less risky than Queens Road. The stock trades about -0.02 of its potential returns per unit of risk. The Queens Road Capital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Queens Road Capital on August 25, 2024 and sell it today you would earn a total of 13.00 from holding Queens Road Capital or generate 20.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. Queens Road Capital
Performance |
| Timeline |
| Maple Leaf Foods |
| Queens Road Capital |
Maple Leaf and Queens Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Queens Road
The main advantage of trading using opposite Maple Leaf and Queens Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Queens Road 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 Queens Road will offset losses from the drop in Queens Road'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 |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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