Correlation Between Maple Leaf and Canso Credit

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

Diversification Opportunities for Maple Leaf and Canso Credit

0.01

Correlation Coefficient

Maple Leaf  Canso Credit

Significant diversification

The 3 months correlation between Maple and Canso is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and Canso Credit Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canso Credit Trust 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 Canso Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canso Credit Trust has no effect on the direction of Maple Leaf i.e., Maple Leaf and Canso Credit go up and down completely randomly.

Pair Corralation between Maple Leaf and Canso Credit

Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the Canso Credit. In addition to that, Maple Leaf is 4.41 times more volatile than Canso Credit Trust. It trades about -0.4 of its total potential returns per unit of risk. Canso Credit Trust is currently generating about 0.37 per unit of volatility. If you would invest  1,546  in Canso Credit Trust on September 25, 2024 and sell it today you would earn a total of  41.00  from holding Canso Credit Trust or generate 2.65% return on investment over 90 days.

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

Maple Leaf Foods  vs.  Canso Credit Trust

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 newest stock price disarray, may contribute to short-term losses for the investors.

Canso Credit Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Credit Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canso Credit is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Maple Leaf and Canso Credit

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

The idea behind Maple Leaf Foods and Canso Credit Trust 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 CEOs Directory module to screen CEOs from public companies around the world.