Correlation Between Genco Shipping and McDonalds
Can any of the company-specific risk be diversified away by investing in both Genco Shipping and McDonalds 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 Genco Shipping and McDonalds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genco Shipping Trading and McDonalds, you can compare the effects of market volatilities on Genco Shipping and McDonalds 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 Genco Shipping with a short position of McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genco Shipping and McDonalds.
Diversification Opportunities for Genco Shipping and McDonalds
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Genco and McDonalds is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Genco Shipping Trading and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds and Genco Shipping 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 Genco Shipping Trading are associated (or correlated) with McDonalds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds has no effect on the direction of Genco Shipping i.e., Genco Shipping and McDonalds go up and down completely randomly.
Pair Corralation between Genco Shipping and McDonalds
Assuming the 90 days trading horizon Genco Shipping Trading is expected to under-perform the McDonalds. In addition to that, Genco Shipping is 1.79 times more volatile than McDonalds. It trades about -0.09 of its total potential returns per unit of risk. McDonalds is currently generating about 0.12 per unit of volatility. If you would invest 23,667 in McDonalds on September 3, 2024 and sell it today you would earn a total of 4,238 from holding McDonalds or generate 17.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genco Shipping Trading vs. McDonalds
Performance |
| Timeline |
| Genco Shipping Trading |
| McDonalds |
Genco Shipping and McDonalds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genco Shipping and McDonalds
The main advantage of trading using opposite Genco Shipping and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genco Shipping position performs unexpectedly, McDonalds 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 will offset losses from the drop in McDonalds' long position.| Genco Shipping vs. GRIFFIN MINING LTD | Genco Shipping vs. Retail Estates NV | Genco Shipping vs. Evolution Mining Limited | Genco Shipping vs. National Retail Properties |
| McDonalds vs. Sumitomo Rubber Industries | McDonalds vs. Salesforce | McDonalds vs. National Beverage Corp | McDonalds vs. China Resources Beer |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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