Correlation Between Maple Leaf and Zonte Metals

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

Diversification Opportunities for Maple Leaf and Zonte Metals

-0.37

Correlation Coefficient

Maple Leaf  Zonte Metals

Very good diversification

The 3 months correlation between Maple and Zonte is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Zonte Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zonte Metals 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 Zonte Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zonte Metals has no effect on the direction of Maple Leaf i.e., Maple Leaf and Zonte Metals go up and down completely randomly.

Pair Corralation between Maple Leaf and Zonte Metals

Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 0.25 times more return on investment than Zonte Metals. However, Maple Leaf Foods is 3.97 times less risky than Zonte Metals. It trades about 0.18 of its potential returns per unit of risk. Zonte Metals is currently generating about -0.01 per unit of risk. If you would invest  2,015  in Maple Leaf Foods on December 20, 2024 and sell it today you would earn a total of  489.00  from holding Maple Leaf Foods or generate 24.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Maple Leaf Foods  vs.  Zonte Metals

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.

Zonte Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zonte Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Zonte Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Maple Leaf and Zonte Metals

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

The idea behind Maple Leaf Foods and Zonte Metals 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.