Correlation Between Maple Leaf and Northstar Clean
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Northstar Clean 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 Northstar Clean 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 Northstar Clean Technologies, you can compare the effects of market volatilities on Maple Leaf and Northstar Clean 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 Northstar Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Northstar Clean.
Diversification Opportunities for Maple Leaf and Northstar Clean
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Maple and Northstar is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech 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 Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of Maple Leaf i.e., Maple Leaf and Northstar Clean go up and down completely randomly.
Pair Corralation between Maple Leaf and Northstar Clean
Assuming the 90 days trading horizon Maple Leaf is expected to generate 2.02 times less return on investment than Northstar Clean. But when comparing it to its historical volatility, Maple Leaf Foods is 1.96 times less risky than Northstar Clean. It trades about 0.18 of its potential returns per unit of risk. Northstar Clean Technologies is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Northstar Clean Technologies on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Northstar Clean Technologies or generate 16.0% 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. Northstar Clean Technologies
Performance |
| Timeline |
| Maple Leaf Foods |
| Northstar Clean Tech |
Maple Leaf and Northstar Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Northstar Clean
The main advantage of trading using opposite Maple Leaf and Northstar Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Northstar Clean 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 Northstar Clean will offset losses from the drop in Northstar Clean's long position.| Maple Leaf vs. Leons Furniture Limited | Maple Leaf vs. Autocanada | Maple Leaf vs. Premium Brands Holdings | Maple Leaf vs. Exco Technologies Limited |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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