Correlation Between Maple Leaf and Aftermath Silver

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

Diversification Opportunities for Maple Leaf and Aftermath Silver

-0.07

Correlation Coefficient

Maple Leaf  Aftermath Silver

Good diversification

The 3 months correlation between Maple and Aftermath is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Aftermath Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aftermath Silver 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 Aftermath Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aftermath Silver has no effect on the direction of Maple Leaf i.e., Maple Leaf and Aftermath Silver go up and down completely randomly.

Pair Corralation between Maple Leaf and Aftermath Silver

Assuming the 90 days trading horizon Maple Leaf is expected to generate 12.57 times less return on investment than Aftermath Silver. But when comparing it to its historical volatility, Maple Leaf Foods is 3.93 times less risky than Aftermath Silver. It trades about 0.05 of its potential returns per unit of risk. Aftermath Silver is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Aftermath Silver on September 3, 2024 and sell it today you would earn a total of  18.00  from holding Aftermath Silver or generate 58.06% return on investment over 90 days.

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

Maple Leaf Foods  vs.  Aftermath Silver

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.

Aftermath Silver

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aftermath Silver are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Aftermath Silver showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maple Leaf and Aftermath Silver

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

The idea behind Maple Leaf Foods and Aftermath Silver 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.