Correlation Between North American and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both North American and Maple Leaf 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 North American and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Construction and Maple Leaf Foods, you can compare the effects of market volatilities on North American and Maple Leaf 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 North American with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Maple Leaf.
Diversification Opportunities for North American and Maple Leaf
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between North and Maple is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and Maple Leaf Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Foods and North American 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 North American Construction are associated (or correlated) with Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Foods has no effect on the direction of North American i.e., North American and Maple Leaf go up and down completely randomly.
Pair Corralation between North American and Maple Leaf
Assuming the 90 days trading horizon North American Construction is expected to generate 1.19 times more return on investment than Maple Leaf. However, North American is 1.19 times more volatile than Maple Leaf Foods. It trades about -0.01 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about -0.02 per unit of risk. If you would invest 3,145 in North American Construction on September 3, 2024 and sell it today you would lose (295.00) from holding North American Construction or give up 9.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Construction vs. Maple Leaf Foods
Performance |
| Timeline |
| North American Const |
| Maple Leaf Foods |
North American and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Maple Leaf
The main advantage of trading using opposite North American and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Maple Leaf 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 Maple Leaf will offset losses from the drop in Maple Leaf's long position.| North American vs. PHX Energy Services | North American vs. CES Energy Solutions | North American vs. Total Energy Services | North American vs. Pason Systems |
| Maple Leaf vs. Saputo Inc | Maple Leaf vs. George Weston Limited | Maple Leaf vs. Empire Company Limited | Maple Leaf vs. Premium Brands Holdings |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |