Correlation Between MTY Food and AMERICAN EXPRESS
Can any of the company-specific risk be diversified away by investing in both MTY Food and AMERICAN EXPRESS 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 AMERICAN EXPRESS 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 AMERICAN EXPRESS CDR, you can compare the effects of market volatilities on MTY Food and AMERICAN EXPRESS 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 AMERICAN EXPRESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTY Food and AMERICAN EXPRESS.
Diversification Opportunities for MTY Food and AMERICAN EXPRESS
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MTY and AMERICAN is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and AMERICAN EXPRESS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN EXPRESS CDR 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 AMERICAN EXPRESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN EXPRESS CDR has no effect on the direction of MTY Food i.e., MTY Food and AMERICAN EXPRESS go up and down completely randomly.
Pair Corralation between MTY Food and AMERICAN EXPRESS
Assuming the 90 days trading horizon MTY Food is expected to generate 1.94 times less return on investment than AMERICAN EXPRESS. But when comparing it to its historical volatility, MTY Food Group is 1.47 times less risky than AMERICAN EXPRESS. It trades about 0.17 of its potential returns per unit of risk. AMERICAN EXPRESS CDR is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,408 in AMERICAN EXPRESS CDR on September 2, 2024 and sell it today you would earn a total of 276.00 from holding AMERICAN EXPRESS CDR or generate 11.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTY Food Group vs. AMERICAN EXPRESS CDR
Performance |
| Timeline |
| MTY Food Group |
| AMERICAN EXPRESS CDR |
MTY Food and AMERICAN EXPRESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTY Food and AMERICAN EXPRESS
The main advantage of trading using opposite MTY Food and AMERICAN EXPRESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTY Food position performs unexpectedly, AMERICAN EXPRESS 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 AMERICAN EXPRESS will offset losses from the drop in AMERICAN EXPRESS's long position.| MTY Food vs. Restaurant Brands International | MTY Food vs. Enghouse Systems | MTY Food vs. Metro Inc | MTY Food vs. BRP Inc |
| AMERICAN EXPRESS vs. Birchtech Corp | AMERICAN EXPRESS vs. Dream Industrial Real | AMERICAN EXPRESS vs. Electra Battery Materials | AMERICAN EXPRESS vs. Metalero Mining Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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