Correlation Between Quipt Home and Maple Leaf

Can any of the company-specific risk be diversified away by investing in both Quipt Home and Maple Leaf 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 Quipt Home and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quipt Home Medical and Maple Leaf Foods, you can compare the effects of market volatilities on Quipt Home and Maple Leaf 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 Quipt Home with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quipt Home and Maple Leaf.

Diversification Opportunities for Quipt Home and Maple Leaf

-0.55

Correlation Coefficient

Quipt Home  Maple Leaf

Excellent diversification

The 3 months correlation between Quipt and Maple is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Quipt Home Medical and Maple Leaf Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Foods and Quipt Home 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 Quipt Home Medical are associated (or correlated) with Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Foods has no effect on the direction of Quipt Home i.e., Quipt Home and Maple Leaf go up and down completely randomly.

Pair Corralation between Quipt Home and Maple Leaf

Assuming the 90 days trading horizon Quipt Home Medical is expected to under-perform the Maple Leaf. In addition to that, Quipt Home is 1.76 times more volatile than Maple Leaf Foods. It trades about -0.02 of its total potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.18 per unit of volatility. If you would invest  2,015  in Maple Leaf Foods on December 20, 2024 and sell it today you would earn a total of  484.00  from holding Maple Leaf Foods or generate 24.02% return on investment over 90 days.

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

Quipt Home Medical  vs.  Maple Leaf Foods

Quipt Home Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quipt Home Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Quipt Home is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Quipt Home and Maple Leaf

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

The idea behind Quipt Home Medical and Maple Leaf Foods 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.