Correlation Between MTY Food and NTT DATA

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

Diversification Opportunities for MTY Food and NTT DATA

0.6

Correlation Coefficient

MTY Food  NTT DATA

Poor diversification

The 3 months correlation between MTY and NTT is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and NTT DATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTT DATA 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 NTT DATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTT DATA has no effect on the direction of MTY Food i.e., MTY Food and NTT DATA go up and down completely randomly.

Pair Corralation between MTY Food and NTT DATA

Assuming the 90 days horizon MTY Food Group is expected to under-perform the NTT DATA. In addition to that, MTY Food is 1.22 times more volatile than NTT DATA . It trades about -0.08 of its total potential returns per unit of risk. NTT DATA is currently generating about -0.06 per unit of volatility. If you would invest  1,850  in NTT DATA on December 18, 2024 and sell it today you would lose (150.00) from holding NTT DATA or give up 8.11% of portfolio value over 90 days.

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

MTY Food Group  vs.  NTT DATA

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

NTT DATA

Risk-Adjusted Performance

Very Weak

Over the last 90 days NTT DATA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with MTY Food and NTT DATA

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

The idea behind MTY Food Group and NTT DATA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.