Correlation Between MTY Food and Quartz Mountain

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

Diversification Opportunities for MTY Food and Quartz Mountain

-0.52

Correlation Coefficient

MTY Food  Quartz Mountain

Excellent diversification

The 3 months correlation between MTY and Quartz is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and Quartz Mountain Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quartz Mountain 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 Quartz Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quartz Mountain Resources has no effect on the direction of MTY Food i.e., MTY Food and Quartz Mountain go up and down completely randomly.

Pair Corralation between MTY Food and Quartz Mountain

Assuming the 90 days trading horizon MTY Food Group is expected to under-perform the Quartz Mountain. But the stock apears to be less risky and, when comparing its historical volatility, MTY Food Group is 2.93 times less risky than Quartz Mountain. The stock trades about -0.03 of its potential returns per unit of risk. The Quartz Mountain Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Quartz Mountain Resources on December 28, 2024 and sell it today you would earn a total of  23.00  from holding Quartz Mountain Resources or generate 60.53% return on investment over 90 days.

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

MTY Food Group  vs.  Quartz Mountain Resources

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 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.

Quartz Mountain Resources

Risk-Adjusted Performance

OK

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

Pair Trading with MTY Food and Quartz Mountain

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

The idea behind MTY Food Group and Quartz Mountain 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.