Correlation Between A W and MTY Food
Can any of the company-specific risk be diversified away by investing in both A W 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 A W and MTY Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A W FOOD and MTY Food Group, you can compare the effects of market volatilities on A W 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 A W with a short position of MTY Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of A W and MTY Food.
Diversification Opportunities for A W and MTY Food
Modest diversification
The 3 months correlation between A W and MTY is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding A W FOOD 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 A W 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 A W FOOD 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 A W i.e., A W and MTY Food go up and down completely randomly.
Pair Corralation between A W and MTY Food
Assuming the 90 days horizon A W FOOD is expected to under-perform the MTY Food. But the stock apears to be less risky and, when comparing its historical volatility, A W FOOD is 2.97 times less risky than MTY Food. The stock trades about -0.06 of its potential returns per unit of risk. The MTY Food Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,568 in MTY Food Group on August 31, 2024 and sell it today you would earn a total of 176.00 from holding MTY Food Group or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
A W FOOD vs. MTY Food Group
Performance |
| Timeline |
| A W FOOD |
| MTY Food Group |
A W and MTY Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A W and MTY Food
The main advantage of trading using opposite A W and MTY Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A W 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.| A W vs. Restaurant Brands International | A W vs. MTY Food Group | A W vs. Boston Pizza Royalties | A W vs. The Keg Royalties |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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