Correlation Between McDonalds and African Gold
Can any of the company-specific risk be diversified away by investing in both McDonalds and African Gold 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 McDonalds and African Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and African Gold Acquisition, you can compare the effects of market volatilities on McDonalds and African Gold 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 McDonalds with a short position of African Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and African Gold.
Diversification Opportunities for McDonalds and African Gold
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between McDonalds and African is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and African Gold Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Gold Acquisition and McDonalds 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 McDonalds are associated (or correlated) with African Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Gold Acquisition has no effect on the direction of McDonalds i.e., McDonalds and African Gold go up and down completely randomly.
Pair Corralation between McDonalds and African Gold
If you would invest 1,060 in African Gold Acquisition on October 24, 2024 and sell it today you would earn a total of 0.00 from holding African Gold Acquisition or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 5.56% |
| Values | Daily Returns |
McDonalds vs. African Gold Acquisition
Performance |
| Timeline |
| McDonalds |
| African Gold Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
McDonalds and African Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and African Gold
The main advantage of trading using opposite McDonalds and African Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, African Gold 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 African Gold will offset losses from the drop in African Gold's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Yum Brands | McDonalds vs. The Wendys Co | McDonalds vs. Wingstop |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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