Correlation Between X FAB and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both X FAB 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 X FAB and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Maple Leaf Foods, you can compare the effects of market volatilities on X FAB 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 X FAB with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Maple Leaf.
Diversification Opportunities for X FAB and Maple Leaf
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFB and Maple is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries 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 X FAB 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 X FAB Silicon Foundries 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 X FAB i.e., X FAB and Maple Leaf go up and down completely randomly.
Pair Corralation between X FAB and Maple Leaf
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Maple Leaf. In addition to that, X FAB is 1.36 times more volatile than Maple Leaf Foods. It trades about -0.04 of its total potential returns per unit of risk. Maple Leaf Foods is currently generating about -0.01 per unit of volatility. If you would invest 1,646 in Maple Leaf Foods on November 2, 2024 and sell it today you would lose (216.00) from holding Maple Leaf Foods or give up 13.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Maple Leaf Foods
Performance |
| Timeline |
| X FAB Silicon |
| Maple Leaf Foods |
X FAB and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Maple Leaf
The main advantage of trading using opposite X FAB and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB 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.| X FAB vs. SIVERS SEMICONDUCTORS AB | X FAB vs. NorAm Drilling AS | X FAB vs. Volkswagen AG | X FAB vs. Darden Restaurants |
| Maple Leaf vs. Avanos Medical | Maple Leaf vs. ONWARD MEDICAL BV | Maple Leaf vs. MeVis Medical Solutions | Maple Leaf vs. DeVry Education Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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