Correlation Between MTY Food and Information Services

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

Diversification Opportunities for MTY Food and Information Services

-0.65

Correlation Coefficient

MTY Food  Information Services

Excellent diversification

The 3 months correlation between MTY and Information is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of MTY Food i.e., MTY Food and Information Services go up and down completely randomly.

Pair Corralation between MTY Food and Information Services

Assuming the 90 days trading horizon MTY Food Group is expected to generate 1.38 times more return on investment than Information Services. However, MTY Food is 1.38 times more volatile than Information Services. It trades about 0.14 of its potential returns per unit of risk. Information Services is currently generating about -0.1 per unit of risk. If you would invest  4,188  in MTY Food Group on September 16, 2024 and sell it today you would earn a total of  572.00  from holding MTY Food Group or generate 13.66% return on investment over 90 days.

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

MTY Food Group  vs.  Information Services

MTY Food Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MTY Food Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, MTY Food displayed solid returns over the last few months and may actually be approaching a breakup point.

Information Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Information Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with MTY Food and Information Services

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

The idea behind MTY Food Group and Information Services 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.