Correlation Between Medical Facilities and McDonalds Corp
Can any of the company-specific risk be diversified away by investing in both Medical Facilities 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 Medical Facilities and McDonalds Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Facilities and McDonalds Corp CDR, you can compare the effects of market volatilities on Medical Facilities 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 Medical Facilities with a short position of McDonalds Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Facilities and McDonalds Corp.
Diversification Opportunities for Medical Facilities and McDonalds Corp
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Medical and McDonalds is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Medical Facilities 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 Medical Facilities 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 Medical Facilities 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 Medical Facilities i.e., Medical Facilities and McDonalds Corp go up and down completely randomly.
Pair Corralation between Medical Facilities and McDonalds Corp
Assuming the 90 days horizon Medical Facilities is expected to generate 1.87 times more return on investment than McDonalds Corp. However, Medical Facilities is 1.87 times more volatile than McDonalds Corp CDR. It trades about 0.16 of its potential returns per unit of risk. McDonalds Corp CDR is currently generating about -0.06 per unit of risk. If you would invest 1,541 in Medical Facilities on November 3, 2024 and sell it today you would earn a total of 104.00 from holding Medical Facilities or generate 6.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Facilities vs. McDonalds Corp CDR
Performance |
| Timeline |
| Medical Facilities |
| McDonalds Corp CDR |
Medical Facilities and McDonalds Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Facilities and McDonalds Corp
The main advantage of trading using opposite Medical Facilities and McDonalds Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Facilities 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.| Medical Facilities vs. Extendicare | Medical Facilities vs. Sienna Senior Living | Medical Facilities vs. Rogers Sugar | Medical Facilities vs. Chemtrade Logistics Income |
| McDonalds Corp vs. Brookfield Office Properties | McDonalds Corp vs. Northstar Clean Technologies | McDonalds Corp vs. Guru Organic Energy | McDonalds Corp vs. Labrador Iron Ore |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |