Correlation Between Maple Leaf and A W

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

Diversification Opportunities for Maple Leaf and A W

0.93

Correlation Coefficient

Maple Leaf  A W

Almost no diversification

The 3 months correlation between Maple and A W is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and A W FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A W FOOD 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 A W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A W FOOD has no effect on the direction of Maple Leaf i.e., Maple Leaf and A W go up and down completely randomly.

Pair Corralation between Maple Leaf and A W

Assuming the 90 days trading horizon Maple Leaf is expected to generate 1.09 times less return on investment than A W. But when comparing it to its historical volatility, Maple Leaf Foods is 1.08 times less risky than A W. It trades about 0.3 of its potential returns per unit of risk. A W FOOD is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  3,089  in A W FOOD on April 20, 2025 and sell it today you would earn a total of  834.00  from holding A W FOOD or generate 27.0% return on investment over 90 days.

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

Maple Leaf Foods  vs.  A W FOOD

Maple Leaf Foods

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Maple Leaf Foods are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Maple Leaf displayed solid returns over the last few months and may actually be approaching a breakup point.

A W FOOD

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in A W FOOD are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, A W displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maple Leaf and A W

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

The idea behind Maple Leaf Foods and A W FOOD 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.