Correlation Between Maple Leaf and Dividend Growth

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

Diversification Opportunities for Maple Leaf and Dividend Growth

-0.43

Correlation Coefficient

Maple Leaf  Dividend Growth

Very good diversification

The 3 months correlation between Maple and Dividend is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Dividend Growth Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Growth Split 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 Dividend Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Growth Split has no effect on the direction of Maple Leaf i.e., Maple Leaf and Dividend Growth go up and down completely randomly.

Pair Corralation between Maple Leaf and Dividend Growth

Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the Dividend Growth. In addition to that, Maple Leaf is 3.48 times more volatile than Dividend Growth Split. It trades about -0.09 of its total potential returns per unit of risk. Dividend Growth Split is currently generating about 0.15 per unit of volatility. If you would invest  1,015  in Dividend Growth Split on October 11, 2024 and sell it today you would earn a total of  43.00  from holding Dividend Growth Split or generate 4.24% return on investment over 90 days.

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

Maple Leaf Foods  vs.  Dividend Growth Split

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.

Dividend Growth Split

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend Growth Split are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dividend Growth is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Maple Leaf and Dividend Growth

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

The idea behind Maple Leaf Foods and Dividend Growth Split 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.