Correlation Between Maple Leaf and Rezolute
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Rezolute 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 Rezolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maple Leaf Green and Rezolute, you can compare the effects of market volatilities on Maple Leaf and Rezolute 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 Rezolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Rezolute.
Diversification Opportunities for Maple Leaf and Rezolute
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Maple and Rezolute is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Green and Rezolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rezolute 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 Green are associated (or correlated) with Rezolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rezolute has no effect on the direction of Maple Leaf i.e., Maple Leaf and Rezolute go up and down completely randomly.
Pair Corralation between Maple Leaf and Rezolute
Assuming the 90 days horizon Maple Leaf Green is expected to generate 3.39 times more return on investment than Rezolute. However, Maple Leaf is 3.39 times more volatile than Rezolute. It trades about 0.07 of its potential returns per unit of risk. Rezolute is currently generating about 0.07 per unit of risk. If you would invest 4.60 in Maple Leaf Green on August 25, 2024 and sell it today you would lose (1.60) from holding Maple Leaf Green or give up 34.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Maple Leaf Green vs. Rezolute
Performance |
| Timeline |
| Maple Leaf Green |
| Rezolute |
Maple Leaf and Rezolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Rezolute
The main advantage of trading using opposite Maple Leaf and Rezolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Rezolute 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 Rezolute will offset losses from the drop in Rezolute's long position.| Maple Leaf vs. Greater Cannabis | Maple Leaf vs. Global Hemp Group | Maple Leaf vs. Cannabis Suisse Corp | Maple Leaf vs. Mc Endvrs |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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