Correlation Between MTY Food and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both MTY Food and Costco Wholesale 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 Costco Wholesale 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 Costco Wholesale Corp, you can compare the effects of market volatilities on MTY Food and Costco Wholesale 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 Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTY Food and Costco Wholesale.
Diversification Opportunities for MTY Food and Costco Wholesale
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MTY and Costco is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and Costco Wholesale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale Corp 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale Corp has no effect on the direction of MTY Food i.e., MTY Food and Costco Wholesale go up and down completely randomly.
Pair Corralation between MTY Food and Costco Wholesale
Assuming the 90 days trading horizon MTY Food Group is expected to under-perform the Costco Wholesale. In addition to that, MTY Food is 1.5 times more volatile than Costco Wholesale Corp. It trades about -0.02 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.16 per unit of volatility. If you would invest 2,369 in Costco Wholesale Corp on September 1, 2024 and sell it today you would earn a total of 2,149 from holding Costco Wholesale Corp or generate 90.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTY Food Group vs. Costco Wholesale Corp
Performance |
| Timeline |
| MTY Food Group |
| Costco Wholesale Corp |
MTY Food and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTY Food and Costco Wholesale
The main advantage of trading using opposite MTY Food and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTY Food position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.| MTY Food vs. Restaurant Brands International | MTY Food vs. Enghouse Systems | MTY Food vs. Metro Inc | MTY Food vs. BRP Inc |
| Costco Wholesale vs. Amazon CDR | Costco Wholesale vs. Berkshire Hathaway CDR | Costco Wholesale vs. UnitedHealth Group CDR | Costco Wholesale vs. Apple Inc CDR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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