Correlation Between Maple Leaf and TransGlobal Assets
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and TransGlobal Assets 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 TransGlobal Assets 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 TransGlobal Assets, you can compare the effects of market volatilities on Maple Leaf and TransGlobal Assets 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 TransGlobal Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and TransGlobal Assets.
Diversification Opportunities for Maple Leaf and TransGlobal Assets
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Maple and TransGlobal is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Green and TransGlobal Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransGlobal Assets 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 TransGlobal Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransGlobal Assets has no effect on the direction of Maple Leaf i.e., Maple Leaf and TransGlobal Assets go up and down completely randomly.
Pair Corralation between Maple Leaf and TransGlobal Assets
Assuming the 90 days horizon Maple Leaf Green is expected to generate 1.35 times more return on investment than TransGlobal Assets. However, Maple Leaf is 1.35 times more volatile than TransGlobal Assets. It trades about 0.09 of its potential returns per unit of risk. TransGlobal Assets is currently generating about -0.05 per unit of risk. If you would invest 3.50 in Maple Leaf Green on August 28, 2024 and sell it today you would lose (0.11) from holding Maple Leaf Green or give up 3.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Green vs. TransGlobal Assets
Performance |
| Timeline |
| Maple Leaf Green |
| TransGlobal Assets |
Maple Leaf and TransGlobal Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and TransGlobal Assets
The main advantage of trading using opposite Maple Leaf and TransGlobal Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, TransGlobal Assets 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 TransGlobal Assets will offset losses from the drop in TransGlobal Assets' long position.| Maple Leaf vs. Rezolute | Maple Leaf vs. Tempest Therapeutics | Maple Leaf vs. Forte Biosciences | Maple Leaf vs. Dyadic International |
| TransGlobal Assets vs. Greater Cannabis | TransGlobal Assets vs. Galexxy Holdings | TransGlobal Assets vs. GelStat Corp | TransGlobal Assets vs. Golden Developing Solutions |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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