Correlation Between Good Times and McDonalds Holdings
Can any of the company-specific risk be diversified away by investing in both Good Times and McDonalds Holdings 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 Good Times and McDonalds Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Good Times Restaurants and McDonalds Holdings, you can compare the effects of market volatilities on Good Times and McDonalds Holdings 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 Good Times with a short position of McDonalds Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Times and McDonalds Holdings.
Diversification Opportunities for Good Times and McDonalds Holdings
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Good and McDonalds is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Good Times Restaurants and McDonalds Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds Holdings and Good Times 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 Good Times Restaurants are associated (or correlated) with McDonalds Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds Holdings has no effect on the direction of Good Times i.e., Good Times and McDonalds Holdings go up and down completely randomly.
Pair Corralation between Good Times and McDonalds Holdings
Given the investment horizon of 90 days Good Times Restaurants is expected to under-perform the McDonalds Holdings. In addition to that, Good Times is 1.47 times more volatile than McDonalds Holdings. It trades about -0.18 of its total potential returns per unit of risk. McDonalds Holdings is currently generating about -0.22 per unit of volatility. If you would invest 4,135 in McDonalds Holdings on August 27, 2024 and sell it today you would lose (235.00) from holding McDonalds Holdings or give up 5.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Good Times Restaurants vs. McDonalds Holdings
Performance |
| Timeline |
| Good Times Restaurants |
| McDonalds Holdings |
Good Times and McDonalds Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Good Times and McDonalds Holdings
The main advantage of trading using opposite Good Times and McDonalds Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Good Times position performs unexpectedly, McDonalds Holdings 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 Holdings will offset losses from the drop in McDonalds Holdings' long position.| Good Times vs. Nathans Famous | Good Times vs. FAT Brands | Good Times vs. El Pollo Loco | Good Times vs. Ark Restaurants Corp |
| McDonalds Holdings vs. Jollibee Foods Corp | McDonalds Holdings vs. Nathans Famous | McDonalds Holdings vs. Good Times Restaurants | McDonalds Holdings vs. Compass Group PLC |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |