Correlation Between National Bank and MTY Food

Can any of the company-specific risk be diversified away by investing in both National Bank and MTY Food 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 National Bank and MTY Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Bank Holdings and MTY Food Group, you can compare the effects of market volatilities on National Bank and MTY Food 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 National Bank with a short position of MTY Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and MTY Food.

Diversification Opportunities for National Bank and MTY Food

0.69

Correlation Coefficient

National Bank  MTY Food

Poor diversification

The 3 months correlation between National and MTY is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and MTY Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTY Food Group and National Bank 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 National Bank Holdings are associated (or correlated) with MTY Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTY Food Group has no effect on the direction of National Bank i.e., National Bank and MTY Food go up and down completely randomly.

Pair Corralation between National Bank and MTY Food

Assuming the 90 days horizon National Bank Holdings is expected to under-perform the MTY Food. But the stock apears to be less risky and, when comparing its historical volatility, National Bank Holdings is 1.53 times less risky than MTY Food. The stock trades about -0.13 of its potential returns per unit of risk. The MTY Food Group is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  3,073  in MTY Food Group on December 21, 2024 and sell it today you would lose (388.00) from holding MTY Food Group or give up 12.63% of portfolio value over 90 days.

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

National Bank Holdings  vs.  MTY Food Group

National Bank Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Bank Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with National Bank and MTY Food

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

The idea behind National Bank Holdings and MTY Food Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.