Correlation Between Safety Insurance and MTY Food

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

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

Diversification Opportunities for Safety Insurance and MTY Food

0.78

Correlation Coefficient

Safety Insurance  MTY Food

Poor diversification

The 3 months correlation between Safety and MTY is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group 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 Safety Insurance 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 Safety Insurance Group 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 Safety Insurance i.e., Safety Insurance and MTY Food go up and down completely randomly.

Pair Corralation between Safety Insurance and MTY Food

Assuming the 90 days horizon Safety Insurance Group is expected to generate 0.98 times more return on investment than MTY Food. However, Safety Insurance Group is 1.02 times less risky than MTY Food. It trades about 0.12 of its potential returns per unit of risk. MTY Food Group is currently generating about 0.02 per unit of risk. If you would invest  7,119  in Safety Insurance Group on October 10, 2024 and sell it today you would earn a total of  781.00  from holding Safety Insurance Group or generate 10.97% return on investment over 90 days.

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

Safety Insurance Group  vs.  MTY Food Group

Safety Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Insurance Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Safety Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

MTY Food Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MTY Food Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MTY Food is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Safety Insurance and MTY Food

The main advantage of trading using opposite Safety Insurance and MTY Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance 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 Safety Insurance Group 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.