Correlation Between Maple Leaf and Evertz Technologies

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

Diversification Opportunities for Maple Leaf and Evertz Technologies

-0.73

Correlation Coefficient

Maple Leaf  Evertz Technologies

Pay attention - limited upside

The 3 months correlation between Maple and Evertz is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies 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 Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of Maple Leaf i.e., Maple Leaf and Evertz Technologies go up and down completely randomly.

Pair Corralation between Maple Leaf and Evertz Technologies

Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 1.48 times more return on investment than Evertz Technologies. However, Maple Leaf is 1.48 times more volatile than Evertz Technologies Limited. It trades about 0.18 of its potential returns per unit of risk. Evertz Technologies Limited is currently generating about -0.11 per unit of risk. If you would invest  2,013  in Maple Leaf Foods on December 21, 2024 and sell it today you would earn a total of  486.00  from holding Maple Leaf Foods or generate 24.14% return on investment over 90 days.

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

Maple Leaf Foods  vs.  Evertz Technologies Limited

Maple Leaf Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maple Leaf Foods are ranked lower than 13 (%) 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.

Evertz Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evertz Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Maple Leaf and Evertz Technologies

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

The idea behind Maple Leaf Foods and Evertz Technologies Limited 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.