Correlation Between MTY Food and X Fab

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

Diversification Opportunities for MTY Food and X Fab

0.01

Correlation Coefficient

MTY Food  X Fab

Significant diversification

The 3 months correlation between MTY and XFB is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon 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 X Fab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Fab Silicon has no effect on the direction of MTY Food i.e., MTY Food and X Fab go up and down completely randomly.

Pair Corralation between MTY Food and X Fab

Assuming the 90 days horizon MTY Food Group is expected to generate 0.71 times more return on investment than X Fab. However, MTY Food Group is 1.4 times less risky than X Fab. It trades about -0.03 of its potential returns per unit of risk. X Fab Silicon is currently generating about -0.03 per unit of risk. If you would invest  4,502  in MTY Food Group on October 24, 2024 and sell it today you would lose (1,197) from holding MTY Food Group or give up 26.59% of portfolio value over 90 days.

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

MTY Food Group  vs.  X Fab Silicon

MTY Food Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MTY Food Group are ranked lower than 4 (%) 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

X Fab Silicon

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in X Fab Silicon are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, X Fab is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MTY Food and X Fab

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

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