Correlation Between MTY Food and Host Hotels
Can any of the company-specific risk be diversified away by investing in both MTY Food and Host Hotels 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 Host Hotels 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 Host Hotels Resorts, you can compare the effects of market volatilities on MTY Food and Host Hotels 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 Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTY Food and Host Hotels.
Diversification Opportunities for MTY Food and Host Hotels
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MTY and Host is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of MTY Food i.e., MTY Food and Host Hotels go up and down completely randomly.
Pair Corralation between MTY Food and Host Hotels
Assuming the 90 days horizon MTY Food Group is expected to generate 1.7 times more return on investment than Host Hotels. However, MTY Food is 1.7 times more volatile than Host Hotels Resorts. It trades about 0.31 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about -0.24 per unit of risk. If you would invest 3,070 in MTY Food Group on October 28, 2024 and sell it today you would earn a total of 325.00 from holding MTY Food Group or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTY Food Group vs. Host Hotels Resorts
Performance |
| Timeline |
| MTY Food Group |
| Host Hotels Resorts |
MTY Food and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTY Food and Host Hotels
The main advantage of trading using opposite MTY Food and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTY Food position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| MTY Food vs. Kingdee International Software | MTY Food vs. Beta Systems Software | MTY Food vs. KENEDIX OFFICE INV | MTY Food vs. alstria office REIT AG |
| Host Hotels vs. GEAR4MUSIC LS 10 | Host Hotels vs. ALBIS LEASING AG | Host Hotels vs. United Rentals | Host Hotels vs. Gruppo Mutuionline SpA |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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