Correlation Between MTY Food and RELIANCE STEEL
Can any of the company-specific risk be diversified away by investing in both MTY Food and RELIANCE STEEL 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 RELIANCE STEEL 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 RELIANCE STEEL AL, you can compare the effects of market volatilities on MTY Food and RELIANCE STEEL 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 RELIANCE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTY Food and RELIANCE STEEL.
Diversification Opportunities for MTY Food and RELIANCE STEEL
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MTY and RELIANCE is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and RELIANCE STEEL AL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELIANCE STEEL AL 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 RELIANCE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELIANCE STEEL AL has no effect on the direction of MTY Food i.e., MTY Food and RELIANCE STEEL go up and down completely randomly.
Pair Corralation between MTY Food and RELIANCE STEEL
Assuming the 90 days horizon MTY Food is expected to generate 3.09 times less return on investment than RELIANCE STEEL. In addition to that, MTY Food is 2.03 times more volatile than RELIANCE STEEL AL. It trades about 0.08 of its total potential returns per unit of risk. RELIANCE STEEL AL is currently generating about 0.51 per unit of volatility. If you would invest 25,790 in RELIANCE STEEL AL on October 23, 2024 and sell it today you would earn a total of 2,000 from holding RELIANCE STEEL AL or generate 7.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
MTY Food Group vs. RELIANCE STEEL AL
Performance |
| Timeline |
| MTY Food Group |
| RELIANCE STEEL AL |
MTY Food and RELIANCE STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTY Food and RELIANCE STEEL
The main advantage of trading using opposite MTY Food and RELIANCE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTY Food position performs unexpectedly, RELIANCE STEEL 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 RELIANCE STEEL will offset losses from the drop in RELIANCE STEEL's long position.| MTY Food vs. ANTA SPORTS PRODUCT | MTY Food vs. United Rentals | MTY Food vs. COLUMBIA SPORTSWEAR | MTY Food vs. PLAYWAY SA ZY 10 |
| RELIANCE STEEL vs. Lifeway Foods | RELIANCE STEEL vs. Unity Software | RELIANCE STEEL vs. Austevoll Seafood ASA | RELIANCE STEEL vs. MTY Food Group |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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