Correlation Between Renoworks Software and MTY Food

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

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

Diversification Opportunities for Renoworks Software and MTY Food

0.54

Correlation Coefficient

Renoworks Software  MTY Food

Very weak diversification

The 3 months correlation between Renoworks and MTY is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Renoworks Software 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 Renoworks Software 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 Renoworks Software 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 Renoworks Software i.e., Renoworks Software and MTY Food go up and down completely randomly.

Pair Corralation between Renoworks Software and MTY Food

Given the investment horizon of 90 days Renoworks Software is expected to generate 2.72 times more return on investment than MTY Food. However, Renoworks Software is 2.72 times more volatile than MTY Food Group. It trades about 0.04 of its potential returns per unit of risk. MTY Food Group is currently generating about -0.01 per unit of risk. If you would invest  20.00  in Renoworks Software on September 3, 2024 and sell it today you would earn a total of  12.00  from holding Renoworks Software or generate 60.0% return on investment over 90 days.

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

Renoworks Software  vs.  MTY Food Group

Renoworks Software

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Renoworks Software are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Renoworks Software showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Renoworks Software and MTY Food

The main advantage of trading using opposite Renoworks Software and MTY Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renoworks Software 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 Renoworks Software 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.