Correlation Between Maple Leaf and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both Maple Leaf and InPlay Oil 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 InPlay Oil 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 InPlay Oil Corp, you can compare the effects of market volatilities on Maple Leaf and InPlay Oil 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 InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and InPlay Oil.
Diversification Opportunities for Maple Leaf and InPlay Oil
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Maple and InPlay is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Maple Leaf i.e., Maple Leaf and InPlay Oil go up and down completely randomly.
Pair Corralation between Maple Leaf and InPlay Oil
Assuming the 90 days trading horizon Maple Leaf is expected to generate 1.62 times less return on investment than InPlay Oil. But when comparing it to its historical volatility, Maple Leaf Foods is 2.43 times less risky than InPlay Oil. It trades about 0.3 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 722.00 in InPlay Oil Corp on April 21, 2025 and sell it today you would earn a total of 290.00 from holding InPlay Oil Corp or generate 40.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Maple Leaf Foods vs. InPlay Oil Corp
Performance |
Timeline |
Maple Leaf Foods |
InPlay Oil Corp |
Maple Leaf and InPlay Oil Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Maple Leaf and InPlay Oil
The main advantage of trading using opposite Maple Leaf and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.Maple Leaf vs. Saputo Inc | Maple Leaf vs. George Weston Limited | Maple Leaf vs. Empire Company Limited | Maple Leaf vs. Premium Brands Holdings |
InPlay Oil vs. Pine Cliff Energy | InPlay Oil vs. Yangarra Resources | InPlay Oil vs. Bonterra Energy Corp | InPlay Oil vs. Obsidian Energy |
Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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