Correlation Between MTY Food and Iwatani

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

Diversification Opportunities for MTY Food and Iwatani

-0.44

Correlation Coefficient

MTY Food  Iwatani

Very good diversification

The 3 months correlation between MTY and Iwatani is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and Iwatani in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iwatani 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 Iwatani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iwatani has no effect on the direction of MTY Food i.e., MTY Food and Iwatani go up and down completely randomly.

Pair Corralation between MTY Food and Iwatani

Assuming the 90 days horizon MTY Food Group is expected to generate 0.91 times more return on investment than Iwatani. However, MTY Food Group is 1.1 times less risky than Iwatani. It trades about -0.21 of its potential returns per unit of risk. Iwatani is currently generating about -0.24 per unit of risk. If you would invest  3,245  in MTY Food Group on October 10, 2024 and sell it today you would lose (165.00) from holding MTY Food Group or give up 5.08% of portfolio value over 90 days.

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

MTY Food Group  vs.  Iwatani

MTY Food Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MTY Food Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MTY Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Iwatani

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iwatani has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with MTY Food and Iwatani

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

The idea behind MTY Food Group and Iwatani 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.