Correlation Between Tree Island and Maple Peak

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

By analyzing existing cross correlation between Tree Island Steel and Maple Peak Investments, you can compare the effects of market volatilities on Tree Island and Maple Peak 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 Tree Island with a short position of Maple Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tree Island and Maple Peak.

Diversification Opportunities for Tree Island and Maple Peak

0.0

Correlation Coefficient

Tree Island  Maple Peak

Pay attention - limited upside

The 3 months correlation between Tree and Maple is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tree Island Steel and Maple Peak Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Peak Investments and Tree Island 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 Tree Island Steel are associated (or correlated) with Maple Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Peak Investments has no effect on the direction of Tree Island i.e., Tree Island and Maple Peak go up and down completely randomly.

Pair Corralation between Tree Island and Maple Peak

If you would invest  1.00  in Maple Peak Investments on December 3, 2024 and sell it today you would earn a total of  0.00  from holding Maple Peak Investments or generate 0.0% return on investment over 90 days.

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

Tree Island Steel  vs.  Maple Peak Investments

Tree Island Steel

Risk-Adjusted Performance

Very Weak

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

Maple Peak Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maple Peak Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Maple Peak 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 Tree Island and Maple Peak

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

The idea behind Tree Island Steel and Maple Peak Investments 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 Anywhere module to track or share privately all of your investments from the convenience of any device.