Correlation Between BMTC and MTY Food

Can any of the company-specific risk be diversified away by investing in both BMTC 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 BMTC and MTY Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BMTC Group and MTY Food Group, you can compare the effects of market volatilities on BMTC 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 BMTC with a short position of MTY Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMTC and MTY Food.

Diversification Opportunities for BMTC and MTY Food

-0.59

Correlation Coefficient

BMTC  MTY Food

Excellent diversification

The 3 months correlation between BMTC and MTY is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BMTC Group 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 BMTC 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 BMTC Group 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 BMTC i.e., BMTC and MTY Food go up and down completely randomly.

Pair Corralation between BMTC and MTY Food

Assuming the 90 days trading horizon BMTC is expected to generate 6.03 times less return on investment than MTY Food. In addition to that, BMTC is 1.01 times more volatile than MTY Food Group. It trades about 0.0 of its total potential returns per unit of risk. MTY Food Group is currently generating about 0.01 per unit of volatility. If you would invest  4,776  in MTY Food Group on January 28, 2024 and sell it today you would earn a total of  137.00  from holding MTY Food Group or generate 2.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.36%
Values	Daily Returns

BMTC Group  vs.  MTY Food Group

BMTC Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BMTC Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BMTC may actually be approaching a critical reversion point that can send shares even higher in May 2024.

MTY Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MTY Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BMTC and MTY Food

The main advantage of trading using opposite BMTC and MTY Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMTC 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.

The idea behind BMTC Group and MTY Food Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.