Correlation Between McDonalds and Tidal ETF
Can any of the company-specific risk be diversified away by investing in both McDonalds and Tidal ETF 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 Tidal ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Tidal ETF Trust, you can compare the effects of market volatilities on McDonalds and Tidal ETF 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 Tidal ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Tidal ETF.
Diversification Opportunities for McDonalds and Tidal ETF
Poor diversification
The 3 months correlation between McDonalds and Tidal is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Tidal ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal ETF Trust 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 Tidal ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal ETF Trust has no effect on the direction of McDonalds i.e., McDonalds and Tidal ETF go up and down completely randomly.
Pair Corralation between McDonalds and Tidal ETF
Considering the 90-day investment horizon McDonalds is expected to generate 16.39 times less return on investment than Tidal ETF. In addition to that, McDonalds is 1.21 times more volatile than Tidal ETF Trust. It trades about 0.01 of its total potential returns per unit of risk. Tidal ETF Trust is currently generating about 0.12 per unit of volatility. If you would invest 2,504 in Tidal ETF Trust on August 30, 2024 and sell it today you would earn a total of 52.00 from holding Tidal ETF Trust or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Tidal ETF Trust
Performance |
| Timeline |
| McDonalds |
| Tidal ETF Trust |
McDonalds and Tidal ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Tidal ETF
The main advantage of trading using opposite McDonalds and Tidal ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Tidal ETF 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 Tidal ETF will offset losses from the drop in Tidal ETF's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
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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.
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