Correlation Between Maple Leaf and EcoSynthetix

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

Diversification Opportunities for Maple Leaf and EcoSynthetix

0.03

Correlation Coefficient

Maple Leaf  EcoSynthetix

Significant diversification

The 3 months correlation between Maple and EcoSynthetix is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and EcoSynthetix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EcoSynthetix 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 EcoSynthetix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EcoSynthetix has no effect on the direction of Maple Leaf i.e., Maple Leaf and EcoSynthetix go up and down completely randomly.

Pair Corralation between Maple Leaf and EcoSynthetix

Assuming the 90 days trading horizon Maple Leaf is expected to generate 1.53 times less return on investment than EcoSynthetix. In addition to that, Maple Leaf is 1.01 times more volatile than EcoSynthetix. It trades about 0.11 of its total potential returns per unit of risk. EcoSynthetix is currently generating about 0.17 per unit of volatility. If you would invest  396.00  in EcoSynthetix on November 29, 2024 and sell it today you would earn a total of  96.00  from holding EcoSynthetix or generate 24.24% return on investment over 90 days.

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

Maple Leaf Foods  vs.  EcoSynthetix

Maple Leaf Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maple Leaf Foods are ranked lower than 8 (%) 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.

EcoSynthetix

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EcoSynthetix are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, EcoSynthetix displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maple Leaf and EcoSynthetix

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

The idea behind Maple Leaf Foods and EcoSynthetix 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.