Correlation Between Maple Leaf and Brookfield Office

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Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Brookfield Office 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 Brookfield Office 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 Brookfield Office Properties, you can compare the effects of market volatilities on Maple Leaf and Brookfield Office 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 Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Brookfield Office.

Diversification Opportunities for Maple Leaf and Brookfield Office

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between Maple and Brookfield is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office 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 Brookfield Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Office has no effect on the direction of Maple Leaf i.e., Maple Leaf and Brookfield Office go up and down completely randomly.

Pair Corralation between Maple Leaf and Brookfield Office

Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the Brookfield Office. In addition to that, Maple Leaf is 1.51 times more volatile than Brookfield Office Properties. It trades about -0.06 of its total potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.07 per unit of volatility. If you would invest  1,626  in Brookfield Office Properties on October 9, 2024 and sell it today you would earn a total of  74.00  from holding Brookfield Office Properties or generate 4.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Maple Leaf Foods  vs.  Brookfield Office Properties

 Performance 
       Timeline  
Maple Leaf Foods 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Maple Leaf Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Maple Leaf is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Brookfield Office 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield Office is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Maple Leaf and Brookfield Office Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Maple Leaf and Brookfield Office

The main advantage of trading using opposite Maple Leaf and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Brookfield Office 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 Brookfield Office will offset losses from the drop in Brookfield Office's long position.
The idea behind Maple Leaf Foods and Brookfield Office Properties 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.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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