Correlation Between MTY Food and First Majestic
Can any of the company-specific risk be diversified away by investing in both MTY Food and First Majestic 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 First Majestic 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 First Majestic Silver, you can compare the effects of market volatilities on MTY Food and First Majestic 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 First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTY Food and First Majestic.
Diversification Opportunities for MTY Food and First Majestic
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MTY and First is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver 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 First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of MTY Food i.e., MTY Food and First Majestic go up and down completely randomly.
Pair Corralation between MTY Food and First Majestic
Assuming the 90 days trading horizon MTY Food Group is expected to generate 0.6 times more return on investment than First Majestic. However, MTY Food Group is 1.67 times less risky than First Majestic. It trades about -0.02 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.27 per unit of risk. If you would invest 4,612 in MTY Food Group on August 24, 2024 and sell it today you would lose (52.00) from holding MTY Food Group or give up 1.13% 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. First Majestic Silver
Performance |
| Timeline |
| MTY Food Group |
| First Majestic Silver |
MTY Food and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTY Food and First Majestic
The main advantage of trading using opposite MTY Food and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTY Food position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| MTY Food vs. Restaurant Brands International | MTY Food vs. Enghouse Systems | MTY Food vs. Metro Inc | MTY Food vs. goeasy |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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