Correlation Between Maple Leaf and Sun Life
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Sun Life 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 Sun Life 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 Sun Life Financial, you can compare the effects of market volatilities on Maple Leaf and Sun Life 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 Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Sun Life.
Diversification Opportunities for Maple Leaf and Sun Life
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Maple and Sun is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Maple Leaf i.e., Maple Leaf and Sun Life go up and down completely randomly.
Pair Corralation between Maple Leaf and Sun Life
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 1.84 times more return on investment than Sun Life. However, Maple Leaf is 1.84 times more volatile than Sun Life Financial. It trades about 0.15 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.11 per unit of risk. If you would invest 2,134 in Maple Leaf Foods on September 2, 2024 and sell it today you would earn a total of 141.00 from holding Maple Leaf Foods or generate 6.61% 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. Sun Life Financial
Performance |
| Timeline |
| Maple Leaf Foods |
| Sun Life Financial |
Maple Leaf and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Sun Life
The main advantage of trading using opposite Maple Leaf and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life'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 |
| Sun Life vs. InPlay Oil Corp | Sun Life vs. Maple Leaf Foods | Sun Life vs. Perseus Mining | Sun Life vs. Ramp Metals |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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