Correlation Between Information Services and MTY Food
Can any of the company-specific risk be diversified away by investing in both Information Services 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 Information Services and MTY Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Services International Dentsu and MTY Food Group, you can compare the effects of market volatilities on Information Services 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 Information Services with a short position of MTY Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and MTY Food.
Diversification Opportunities for Information Services and MTY Food
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Information and MTY is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati 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 Information Services 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 Information Services International Dentsu 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 Information Services i.e., Information Services and MTY Food go up and down completely randomly.
Pair Corralation between Information Services and MTY Food
Assuming the 90 days horizon Information Services International Dentsu is expected to generate 1.15 times more return on investment than MTY Food. However, Information Services is 1.15 times more volatile than MTY Food Group. It trades about 0.03 of its potential returns per unit of risk. MTY Food Group is currently generating about -0.02 per unit of risk. If you would invest 2,840 in Information Services International Dentsu on October 11, 2024 and sell it today you would earn a total of 660.00 from holding Information Services International Dentsu or generate 23.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Services Internati vs. MTY Food Group
Performance |
| Timeline |
| Information Services |
| MTY Food Group |
Information Services and MTY Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Services and MTY Food
The main advantage of trading using opposite Information Services and MTY Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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.| Information Services vs. Accenture plc | Information Services vs. International Business Machines | Information Services vs. Capgemini SE | Information Services vs. FUJITSU LTD ADR |
| MTY Food vs. NTT DATA | MTY Food vs. Geely Automobile Holdings | MTY Food vs. Information Services International Dentsu | MTY Food vs. Cass Information Systems |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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