Correlation Between MTY Food and Power Financial
Can any of the company-specific risk be diversified away by investing in both MTY Food and Power Financial 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 Power Financial 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 Power Financial Corp, you can compare the effects of market volatilities on MTY Food and Power Financial 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 Power Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTY Food and Power Financial.
Diversification Opportunities for MTY Food and Power Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MTY and Power is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and Power Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Financial 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 Power Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Financial Corp has no effect on the direction of MTY Food i.e., MTY Food and Power Financial go up and down completely randomly.
Pair Corralation between MTY Food and Power Financial
Assuming the 90 days trading horizon MTY Food Group is expected to generate 0.84 times more return on investment than Power Financial. However, MTY Food Group is 1.2 times less risky than Power Financial. It trades about 0.18 of its potential returns per unit of risk. Power Financial Corp is currently generating about 0.08 per unit of risk. If you would invest 4,587 in MTY Food Group on September 13, 2024 and sell it today you would earn a total of 261.00 from holding MTY Food Group or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTY Food Group vs. Power Financial Corp
Performance |
| Timeline |
| MTY Food Group |
| Power Financial Corp |
MTY Food and Power Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTY Food and Power Financial
The main advantage of trading using opposite MTY Food and Power Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTY Food position performs unexpectedly, Power Financial 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 Power Financial will offset losses from the drop in Power Financial's long position.| MTY Food vs. Berkshire Hathaway CDR | MTY Food vs. Microsoft Corp CDR | MTY Food vs. Apple Inc CDR | MTY Food vs. Alphabet Inc CDR |
| Power Financial vs. Reliq Health Technologies | Power Financial vs. Mako Mining Corp | Power Financial vs. NeuPath Health | Power Financial vs. Forsys Metals 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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