Correlation Between SPORT LISBOA and McDonalds
Can any of the company-specific risk be diversified away by investing in both SPORT LISBOA 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 SPORT LISBOA and McDonalds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPORT LISBOA E and McDonalds, you can compare the effects of market volatilities on SPORT LISBOA 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 SPORT LISBOA with a short position of McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORT LISBOA and McDonalds.
Diversification Opportunities for SPORT LISBOA and McDonalds
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SPORT and McDonalds is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds and SPORT LISBOA 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 SPORT LISBOA E 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 SPORT LISBOA i.e., SPORT LISBOA and McDonalds go up and down completely randomly.
Pair Corralation between SPORT LISBOA and McDonalds
Assuming the 90 days horizon SPORT LISBOA E is expected to under-perform the McDonalds. In addition to that, SPORT LISBOA is 2.27 times more volatile than McDonalds. It trades about -0.01 of its total potential returns per unit of risk. McDonalds is currently generating about 0.04 per unit of volatility. If you would invest 23,904 in McDonalds on September 14, 2024 and sell it today you would earn a total of 4,516 from holding McDonalds or generate 18.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
SPORT LISBOA E vs. McDonalds
Performance |
| Timeline |
| SPORT LISBOA E |
| McDonalds |
SPORT LISBOA and McDonalds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPORT LISBOA and McDonalds
The main advantage of trading using opposite SPORT LISBOA and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORT LISBOA 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.| SPORT LISBOA vs. Charter Communications | SPORT LISBOA vs. Gamma Communications plc | SPORT LISBOA vs. REINET INVESTMENTS SCA | SPORT LISBOA vs. Consolidated Communications Holdings |
| McDonalds vs. SENECA FOODS A | McDonalds vs. SPORT LISBOA E | McDonalds vs. Associated British Foods | McDonalds vs. Transportadora de Gas |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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