Correlation Between Maple Leaf and Royal Bank
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Royal Bank 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 Royal Bank 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 Royal Bank of, you can compare the effects of market volatilities on Maple Leaf and Royal Bank 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 Royal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Royal Bank.
Diversification Opportunities for Maple Leaf and Royal Bank
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Maple and Royal is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank 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 Royal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of Maple Leaf i.e., Maple Leaf and Royal Bank go up and down completely randomly.
Pair Corralation between Maple Leaf and Royal Bank
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 8.53 times more return on investment than Royal Bank. However, Maple Leaf is 8.53 times more volatile than Royal Bank of. It trades about 0.19 of its potential returns per unit of risk. Royal Bank of is currently generating about 0.05 per unit of risk. If you would invest 1,968 in Maple Leaf Foods on October 29, 2024 and sell it today you would earn a total of 158.00 from holding Maple Leaf Foods or generate 8.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. Royal Bank of
Performance |
| Timeline |
| Maple Leaf Foods |
| Royal Bank |
Maple Leaf and Royal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Royal Bank
The main advantage of trading using opposite Maple Leaf and Royal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Royal Bank 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 Royal Bank will offset losses from the drop in Royal Bank'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 |
| Royal Bank vs. Monument Mining Limited | Royal Bank vs. TUT Fitness Group | Royal Bank vs. Millennium Silver Corp | Royal Bank vs. Vizsla Silver 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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