Correlation Between MTY Food and National Beverage
Can any of the company-specific risk be diversified away by investing in both MTY Food and National Beverage 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 National Beverage 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 National Beverage Corp, you can compare the effects of market volatilities on MTY Food and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTY Food and National Beverage.
Diversification Opportunities for MTY Food and National Beverage
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MTY and National is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of MTY Food i.e., MTY Food and National Beverage go up and down completely randomly.
Pair Corralation between MTY Food and National Beverage
Assuming the 90 days horizon MTY Food Group is expected to generate 0.98 times more return on investment than National Beverage. However, MTY Food Group is 1.02 times less risky than National Beverage. It trades about -0.24 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.35 per unit of risk. If you would invest 3,240 in MTY Food Group on October 12, 2024 and sell it today you would lose (175.00) from holding MTY Food Group or give up 5.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTY Food Group vs. National Beverage Corp
Performance |
| Timeline |
| MTY Food Group |
| National Beverage Corp |
MTY Food and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTY Food and National Beverage
The main advantage of trading using opposite MTY Food and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTY Food position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| MTY Food vs. Superior Plus Corp | MTY Food vs. NMI Holdings | MTY Food vs. SIVERS SEMICONDUCTORS AB | MTY Food vs. Talanx AG |
| National Beverage vs. BURLINGTON STORES | National Beverage vs. Calibre Mining Corp | National Beverage vs. GREENX METALS LTD | National Beverage vs. ADRIATIC METALS LS 013355 |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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