Correlation Between MTY Food and Homerun Resources

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

Diversification Opportunities for MTY Food and Homerun Resources

0.35

Correlation Coefficient

MTY Food  Homerun Resources

Weak diversification

The 3 months correlation between MTY and Homerun is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and Homerun Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homerun Resources 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 Homerun Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homerun Resources has no effect on the direction of MTY Food i.e., MTY Food and Homerun Resources go up and down completely randomly.

Pair Corralation between MTY Food and Homerun Resources

Assuming the 90 days trading horizon MTY Food Group is expected to generate 0.23 times more return on investment than Homerun Resources. However, MTY Food Group is 4.38 times less risky than Homerun Resources. It trades about -0.12 of its potential returns per unit of risk. Homerun Resources is currently generating about -0.21 per unit of risk. If you would invest  4,884  in MTY Food Group on October 9, 2024 and sell it today you would lose (149.00) from holding MTY Food Group or give up 3.05% of portfolio value over 90 days.

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

MTY Food Group  vs.  Homerun Resources

MTY Food Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MTY Food Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, MTY Food is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Homerun Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Homerun Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Homerun Resources may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MTY Food and Homerun Resources

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

The idea behind MTY Food Group and Homerun Resources 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.