Correlation Between Element Fleet and Maple Leaf

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

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

Diversification Opportunities for Element Fleet and Maple Leaf

0.54

Correlation Coefficient

Element Fleet  Maple Leaf

Very weak diversification

The 3 months correlation between Element and Maple is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management 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 Element Fleet 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 Element Fleet Management 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 Element Fleet i.e., Element Fleet and Maple Leaf go up and down completely randomly.

Pair Corralation between Element Fleet and Maple Leaf

Assuming the 90 days trading horizon Element Fleet Management is expected to generate 0.75 times more return on investment than Maple Leaf. However, Element Fleet Management is 1.34 times less risky than Maple Leaf. It trades about 0.07 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.05 per unit of risk. If you would invest  2,820  in Element Fleet Management on September 12, 2024 and sell it today you would earn a total of  142.00  from holding Element Fleet Management or generate 5.04% return on investment over 90 days.

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

Element Fleet Management  vs.  Maple Leaf Foods

Element Fleet Management

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Element Fleet Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Element Fleet 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

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maple Leaf Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Maple Leaf is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Element Fleet and Maple Leaf

The main advantage of trading using opposite Element Fleet and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Fleet 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 Element Fleet Management 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.