Correlation Between Lassonde Industries and Maple Leaf

Can any of the company-specific risk be diversified away by investing in both Lassonde Industries 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 Lassonde Industries and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lassonde Industries and Maple Leaf Foods, you can compare the effects of market volatilities on Lassonde Industries 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 Lassonde Industries with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lassonde Industries and Maple Leaf.

Diversification Opportunities for Lassonde Industries and Maple Leaf

0.38

Correlation Coefficient

Lassonde Industries  Maple Leaf

Weak diversification

The 3 months correlation between Lassonde and Maple is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lassonde Industries 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 Lassonde Industries 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 Lassonde Industries 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 Lassonde Industries i.e., Lassonde Industries and Maple Leaf go up and down completely randomly.

Pair Corralation between Lassonde Industries and Maple Leaf

Assuming the 90 days trading horizon Lassonde Industries is expected to generate 1.4 times less return on investment than Maple Leaf. In addition to that, Lassonde Industries is 1.07 times more volatile than Maple Leaf Foods. It trades about 0.13 of its total potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.2 per unit of volatility. If you would invest  1,949  in Maple Leaf Foods on December 30, 2024 and sell it today you would earn a total of  543.00  from holding Maple Leaf Foods or generate 27.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lassonde Industries  vs.  Maple Leaf Foods

Lassonde Industries

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lassonde Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Lassonde Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Maple Leaf Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maple Leaf Foods are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Maple Leaf displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lassonde Industries and Maple Leaf

The main advantage of trading using opposite Lassonde Industries and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lassonde Industries 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 Lassonde Industries 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.