Correlation Between Maple Leaf and Embotelladora Andina
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Embotelladora Andina 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 Embotelladora Andina 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 Embotelladora Andina SA, you can compare the effects of market volatilities on Maple Leaf and Embotelladora Andina 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 Embotelladora Andina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Embotelladora Andina.
Diversification Opportunities for Maple Leaf and Embotelladora Andina
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Maple and Embotelladora is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Embotelladora Andina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embotelladora Andina 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 Embotelladora Andina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embotelladora Andina has no effect on the direction of Maple Leaf i.e., Maple Leaf and Embotelladora Andina go up and down completely randomly.
Pair Corralation between Maple Leaf and Embotelladora Andina
Assuming the 90 days horizon Maple Leaf Foods is expected to generate 1.05 times more return on investment than Embotelladora Andina. However, Maple Leaf is 1.05 times more volatile than Embotelladora Andina SA. It trades about 0.11 of its potential returns per unit of risk. Embotelladora Andina SA is currently generating about -0.14 per unit of risk. If you would invest 1,549 in Maple Leaf Foods on August 28, 2024 and sell it today you would earn a total of 57.00 from holding Maple Leaf Foods or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. Embotelladora Andina SA
Performance |
| Timeline |
| Maple Leaf Foods |
| Embotelladora Andina |
Maple Leaf and Embotelladora Andina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Embotelladora Andina
The main advantage of trading using opposite Maple Leaf and Embotelladora Andina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Embotelladora Andina 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 Embotelladora Andina will offset losses from the drop in Embotelladora Andina's long position.| Maple Leaf vs. Seneca Foods Corp | Maple Leaf vs. Central Garden Pet | Maple Leaf vs. Central Garden Pet | Maple Leaf vs. Lifeway Foods |
| Embotelladora Andina vs. Signet International Holdings | Embotelladora Andina vs. National Beverage Corp | Embotelladora Andina vs. PT Astra International | Embotelladora Andina vs. Embotelladora Andina SA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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