Correlation Between Brookfield and McDonalds Corp
Can any of the company-specific risk be diversified away by investing in both Brookfield and McDonalds Corp 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 Brookfield and McDonalds Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield and McDonalds Corp CDR, you can compare the effects of market volatilities on Brookfield and McDonalds Corp 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 Brookfield with a short position of McDonalds Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield and McDonalds Corp.
Diversification Opportunities for Brookfield and McDonalds Corp
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Brookfield and McDonalds is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and McDonalds Corp CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds Corp CDR and Brookfield 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 Brookfield are associated (or correlated) with McDonalds Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds Corp CDR has no effect on the direction of Brookfield i.e., Brookfield and McDonalds Corp go up and down completely randomly.
Pair Corralation between Brookfield and McDonalds Corp
Assuming the 90 days horizon Brookfield is expected to generate 2.15 times more return on investment than McDonalds Corp. However, Brookfield is 2.15 times more volatile than McDonalds Corp CDR. It trades about 0.07 of its potential returns per unit of risk. McDonalds Corp CDR is currently generating about -0.25 per unit of risk. If you would invest 8,279 in Brookfield on October 25, 2024 and sell it today you would earn a total of 197.00 from holding Brookfield or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield vs. McDonalds Corp CDR
Performance |
| Timeline |
| Brookfield |
| McDonalds Corp CDR |
Brookfield and McDonalds Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield and McDonalds Corp
The main advantage of trading using opposite Brookfield and McDonalds Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield position performs unexpectedly, McDonalds Corp 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 McDonalds Corp will offset losses from the drop in McDonalds Corp's long position.| Brookfield vs. Brookfield Asset Management | Brookfield vs. Alimentation Couchen Tard | Brookfield vs. Brookfield Infrastructure Partners | Brookfield vs. Brookfield Infrastructure Corp |
| McDonalds Corp vs. Costco Wholesale Corp | McDonalds Corp vs. Profound Medical Corp | McDonalds Corp vs. Data Communications Management | McDonalds Corp vs. Quipt Home Medical |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |