Correlation Between Canlan Ice and McDonalds Corp
Can any of the company-specific risk be diversified away by investing in both Canlan Ice 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 Canlan Ice and McDonalds Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canlan Ice Sports and McDonalds Corp CDR, you can compare the effects of market volatilities on Canlan Ice 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 Canlan Ice with a short position of McDonalds Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and McDonalds Corp.
Diversification Opportunities for Canlan Ice and McDonalds Corp
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canlan and McDonalds is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports 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 Canlan Ice 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 Canlan Ice Sports 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 Canlan Ice i.e., Canlan Ice and McDonalds Corp go up and down completely randomly.
Pair Corralation between Canlan Ice and McDonalds Corp
Assuming the 90 days trading horizon Canlan Ice Sports is expected to under-perform the McDonalds Corp. But the stock apears to be less risky and, when comparing its historical volatility, Canlan Ice Sports is 3.33 times less risky than McDonalds Corp. The stock trades about -0.21 of its potential returns per unit of risk. The McDonalds Corp CDR is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,600 in McDonalds Corp CDR on September 15, 2024 and sell it today you would lose (2.00) from holding McDonalds Corp CDR or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canlan Ice Sports vs. McDonalds Corp CDR
Performance |
| Timeline |
| Canlan Ice Sports |
| McDonalds Corp CDR |
Canlan Ice and McDonalds Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and McDonalds Corp
The main advantage of trading using opposite Canlan Ice and McDonalds Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice 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.| Canlan Ice vs. BMTC Group | Canlan Ice vs. Caldwell Partners International | Canlan Ice vs. TWC Enterprises | Canlan Ice vs. Madison Pacific Properties |
| McDonalds Corp vs. Berkshire Hathaway CDR | McDonalds Corp vs. Microsoft Corp CDR | McDonalds Corp vs. Apple Inc CDR | McDonalds Corp vs. Alphabet Inc CDR |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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