Correlation Between MTY Food and Great Portland

Can any of the company-specific risk be diversified away by investing in both MTY Food and Great Portland 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 MTY Food and Great Portland into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MTY Food Group and Great Portland Estates, you can compare the effects of market volatilities on MTY Food and Great Portland 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 MTY Food with a short position of Great Portland. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTY Food and Great Portland.

Diversification Opportunities for MTY Food and Great Portland

0.31

Correlation Coefficient

MTY Food  Great Portland

Weak diversification

The 3 months correlation between MTY and Great is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and Great Portland Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Portland Estates and MTY Food 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 MTY Food Group are associated (or correlated) with Great Portland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Portland Estates has no effect on the direction of MTY Food i.e., MTY Food and Great Portland go up and down completely randomly.

Pair Corralation between MTY Food and Great Portland

Assuming the 90 days horizon MTY Food Group is expected to under-perform the Great Portland. In addition to that, MTY Food is 1.38 times more volatile than Great Portland Estates. It trades about -0.07 of its total potential returns per unit of risk. Great Portland Estates is currently generating about 0.01 per unit of volatility. If you would invest  346.00  in Great Portland Estates on December 19, 2024 and sell it today you would earn a total of  0.00  from holding Great Portland Estates or generate 0.0% return on investment over 90 days.

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

MTY Food Group  vs.  Great Portland Estates

MTY Food Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days MTY Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Great Portland Estates

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Portland Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Great Portland is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MTY Food and Great Portland

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

The idea behind MTY Food Group and Great Portland Estates 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.