Correlation Between Maple Leaf and Data Communications
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and Data Communications 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 Data Communications 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 Data Communications Management, you can compare the effects of market volatilities on Maple Leaf and Data Communications 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 Data Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Data Communications.
Diversification Opportunities for Maple Leaf and Data Communications
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Maple and Data is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Data Communications Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Communications 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 Data Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Communications has no effect on the direction of Maple Leaf i.e., Maple Leaf and Data Communications go up and down completely randomly.
Pair Corralation between Maple Leaf and Data Communications
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 0.62 times more return on investment than Data Communications. However, Maple Leaf Foods is 1.61 times less risky than Data Communications. It trades about 0.2 of its potential returns per unit of risk. Data Communications Management is currently generating about -0.01 per unit of risk. If you would invest 1,949 in Maple Leaf Foods on December 28, 2024 and sell it today you would earn a total of 555.00 from holding Maple Leaf Foods or generate 28.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Maple Leaf Foods vs. Data Communications Management
Performance |
Timeline |
Maple Leaf Foods |
Data Communications |
Maple Leaf and Data Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Maple Leaf and Data Communications
The main advantage of trading using opposite Maple Leaf and Data Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, Data Communications 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 Data Communications will offset losses from the drop in Data Communications' long position.Maple Leaf vs. Saputo Inc | Maple Leaf vs. George Weston Limited | Maple Leaf vs. Empire Company Limited | Maple Leaf vs. Premium Brands Holdings |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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