Correlation Between MTY Food and Identillect Technologies

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

Diversification Opportunities for MTY Food and Identillect Technologies

0.25

Correlation Coefficient

MTY Food  Identillect Technologies

Modest diversification

The 3 months correlation between MTY and Identillect is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and Identillect Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identillect Technologies 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 Identillect Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identillect Technologies has no effect on the direction of MTY Food i.e., MTY Food and Identillect Technologies go up and down completely randomly.

Pair Corralation between MTY Food and Identillect Technologies

Assuming the 90 days trading horizon MTY Food Group is expected to under-perform the Identillect Technologies. But the stock apears to be less risky and, when comparing its historical volatility, MTY Food Group is 13.16 times less risky than Identillect Technologies. The stock trades about -0.05 of its potential returns per unit of risk. The Identillect Technologies Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Identillect Technologies Corp on December 29, 2024 and sell it today you would lose (0.50) from holding Identillect Technologies Corp or give up 50.0% 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.  Identillect Technologies Corp

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. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Identillect Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Identillect Technologies Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Identillect Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MTY Food and Identillect Technologies

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

The idea behind MTY Food Group and Identillect Technologies Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.