Correlation Between Maple Leaf and Earth Alive

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

Diversification Opportunities for Maple Leaf and Earth Alive

0.0

Correlation Coefficient

Maple Leaf  Earth Alive

Pay attention - limited upside

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

Pair Corralation between Maple Leaf and Earth Alive

If you would invest  0.50  in Earth Alive Clean on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Earth Alive Clean 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

Maple Leaf Foods  vs.  Earth Alive Clean

Maple Leaf Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maple Leaf Foods has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Earth Alive Clean

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Maple Leaf and Earth Alive

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

The idea behind Maple Leaf Foods and Earth Alive Clean 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.