Correlation Between Maple Leaf and Resaas Services
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Resaas Services 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 Resaas Services 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 Resaas Services, you can compare the effects of market volatilities on Maple Leaf and Resaas Services 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 Resaas Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Resaas Services.
Diversification Opportunities for Maple Leaf and Resaas Services
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Maple and Resaas is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Resaas Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resaas Services 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 Resaas Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resaas Services has no effect on the direction of Maple Leaf i.e., Maple Leaf and Resaas Services go up and down completely randomly.
Pair Corralation between Maple Leaf and Resaas Services
Assuming the 90 days trading horizon Maple Leaf is expected to generate 9.04 times less return on investment than Resaas Services. But when comparing it to its historical volatility, Maple Leaf Foods is 5.34 times less risky than Resaas Services. It trades about 0.14 of its potential returns per unit of risk. Resaas Services is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Resaas Services on October 25, 2024 and sell it today you would earn a total of 10.00 from holding Resaas Services or generate 50.0% 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. Resaas Services
Performance |
| Timeline |
| Maple Leaf Foods |
| Resaas Services |
Maple Leaf and Resaas Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Resaas Services
The main advantage of trading using opposite Maple Leaf and Resaas Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Resaas Services 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 Resaas Services will offset losses from the drop in Resaas Services' 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 |
| Resaas Services vs. NextSource Materials | Resaas Services vs. Rogers Communications | Resaas Services vs. Reliq Health Technologies | Resaas Services vs. Datable Technology 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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