Correlation Between Starbucks and MTY Food
Can any of the company-specific risk be diversified away by investing in both Starbucks 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 Starbucks and MTY Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and MTY Food Group, you can compare the effects of market volatilities on Starbucks 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 Starbucks with a short position of MTY Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and MTY Food.
Diversification Opportunities for Starbucks and MTY Food
Poor diversification
The 3 months correlation between Starbucks and MTY is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks 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 Starbucks 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 Starbucks 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 Starbucks i.e., Starbucks and MTY Food go up and down completely randomly.
Pair Corralation between Starbucks and MTY Food
Assuming the 90 days horizon Starbucks is expected to generate 1.21 times less return on investment than MTY Food. In addition to that, Starbucks is 1.04 times more volatile than MTY Food Group. It trades about 0.04 of its total potential returns per unit of risk. MTY Food Group is currently generating about 0.05 per unit of volatility. If you would invest 2,995 in MTY Food Group on October 6, 2024 and sell it today you would earn a total of 85.00 from holding MTY Food Group or generate 2.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Starbucks vs. MTY Food Group
Performance |
Timeline |
Starbucks |
MTY Food Group |
Starbucks and MTY Food Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Starbucks and MTY Food
The main advantage of trading using opposite Starbucks and MTY Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks 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.Starbucks vs. AVITA Medical | Starbucks vs. Jacquet Metal Service | Starbucks vs. FIREWEED METALS P | Starbucks vs. SCANDMEDICAL SOLDK 040 |
MTY Food vs. McDonalds | MTY Food vs. Starbucks | MTY Food vs. Superior Plus Corp | MTY Food vs. NMI Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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