Correlation Between T2 Metals and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both T2 Metals 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 T2 Metals and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T2 Metals Corp and Maple Leaf Foods, you can compare the effects of market volatilities on T2 Metals 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 T2 Metals with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of T2 Metals and Maple Leaf.
Diversification Opportunities for T2 Metals and Maple Leaf
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between TWO and Maple is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding T2 Metals Corp 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 T2 Metals 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 T2 Metals Corp 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 T2 Metals i.e., T2 Metals and Maple Leaf go up and down completely randomly.
Pair Corralation between T2 Metals and Maple Leaf
Assuming the 90 days horizon T2 Metals Corp is expected to generate 3.83 times more return on investment than Maple Leaf. However, T2 Metals is 3.83 times more volatile than Maple Leaf Foods. It trades about 0.03 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.01 per unit of risk. If you would invest 35.00 in T2 Metals Corp on August 26, 2024 and sell it today you would lose (7.00) from holding T2 Metals Corp or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
T2 Metals Corp vs. Maple Leaf Foods
Performance |
| Timeline |
| T2 Metals Corp |
| Maple Leaf Foods |
T2 Metals and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T2 Metals and Maple Leaf
The main advantage of trading using opposite T2 Metals and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T2 Metals 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.The idea behind T2 Metals Corp and Maple Leaf Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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