Correlation Between Maple Leaf and Winpak

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

Diversification Opportunities for Maple Leaf and Winpak

0.17

Correlation Coefficient

Maple Leaf  Winpak

Average diversification

The 3 months correlation between Maple and Winpak is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak 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 Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Maple Leaf i.e., Maple Leaf and Winpak go up and down completely randomly.

Pair Corralation between Maple Leaf and Winpak

Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the Winpak. In addition to that, Maple Leaf is 1.36 times more volatile than Winpak. It trades about -0.01 of its total potential returns per unit of risk. Winpak is currently generating about 0.03 per unit of volatility. If you would invest  4,238  in Winpak on September 26, 2024 and sell it today you would earn a total of  583.00  from holding Winpak or generate 13.76% 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.  Winpak

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.

Winpak

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Winpak are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Winpak is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Maple Leaf and Winpak

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

The idea behind Maple Leaf Foods and Winpak 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.