Correlation Between Maple Leaf and Sprott Physical

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

Diversification Opportunities for Maple Leaf and Sprott Physical

0.15

Correlation Coefficient

Maple Leaf  Sprott Physical

Average diversification

The 3 months correlation between Maple and Sprott is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of Maple Leaf i.e., Maple Leaf and Sprott Physical go up and down completely randomly.

Pair Corralation between Maple Leaf and Sprott Physical

Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the Sprott Physical. In addition to that, Maple Leaf is 1.35 times more volatile than Sprott Physical Gold. It trades about -0.09 of its total potential returns per unit of risk. Sprott Physical Gold is currently generating about 0.0 per unit of volatility. If you would invest  2,497  in Sprott Physical Gold on October 11, 2024 and sell it today you would lose (15.00) from holding Sprott Physical Gold or give up 0.6% of portfolio value over 90 days.

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

Maple Leaf Foods  vs.  Sprott Physical Gold

Maple Leaf Foods

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Sprott Physical Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sprott Physical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Maple Leaf and Sprott Physical

The main advantage of trading using opposite Maple Leaf and Sprott Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Sprott Physical 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 Sprott Physical will offset losses from the drop in Sprott Physical's long position.

The idea behind Maple Leaf Foods and Sprott Physical Gold 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.