Correlation Between MDA and Martinrea International

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

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

Diversification Opportunities for MDA and Martinrea International

0.6

Correlation Coefficient

MDA  Martinrea International

Poor diversification

The 3 months correlation between MDA and Martinrea is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MDA and Martinrea International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martinrea International and MDA 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 MDA are associated (or correlated) with Martinrea International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martinrea International has no effect on the direction of MDA i.e., MDA and Martinrea International go up and down completely randomly.

Pair Corralation between MDA and Martinrea International

Assuming the 90 days trading horizon MDA is expected to generate 1.22 times more return on investment than Martinrea International. However, MDA is 1.22 times more volatile than Martinrea International. It trades about 0.33 of its potential returns per unit of risk. Martinrea International is currently generating about 0.19 per unit of risk. If you would invest  2,438  in MDA on April 22, 2025 and sell it today you would earn a total of  1,904  from holding MDA or generate 78.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MDA  vs.  Martinrea International

MDA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MDA are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, MDA displayed solid returns over the last few months and may actually be approaching a breakup point.

Martinrea International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Martinrea International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Martinrea International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MDA and Martinrea International

The main advantage of trading using opposite MDA and Martinrea International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MDA position performs unexpectedly, Martinrea International 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 Martinrea International will offset losses from the drop in Martinrea International's long position.

The idea behind MDA and Martinrea International 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.