Correlation Between McDonalds and Starboard Investment
Can any of the company-specific risk be diversified away by investing in both McDonalds and Starboard Investment 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 Starboard Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Starboard Investment Trust, you can compare the effects of market volatilities on McDonalds and Starboard Investment 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 Starboard Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Starboard Investment.
Diversification Opportunities for McDonalds and Starboard Investment
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McDonalds and Starboard is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Starboard Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starboard Investment 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 Starboard Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starboard Investment has no effect on the direction of McDonalds i.e., McDonalds and Starboard Investment go up and down completely randomly.
Pair Corralation between McDonalds and Starboard Investment
Considering the 90-day investment horizon McDonalds is expected to generate 2.13 times more return on investment than Starboard Investment. However, McDonalds is 2.13 times more volatile than Starboard Investment Trust. It trades about 0.01 of its potential returns per unit of risk. Starboard Investment Trust is currently generating about -0.02 per unit of risk. If you would invest 29,500 in McDonalds on August 30, 2024 and sell it today you would earn a total of 8.00 from holding McDonalds or generate 0.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Starboard Investment Trust
Performance |
| Timeline |
| McDonalds |
| Starboard Investment |
McDonalds and Starboard Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Starboard Investment
The main advantage of trading using opposite McDonalds and Starboard Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Starboard Investment 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 Starboard Investment will offset losses from the drop in Starboard Investment's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
| Starboard Investment vs. Adaptive Alpha Opportunities | Starboard Investment vs. Anfield Dynamic Fixed | Starboard Investment vs. American Century ETF | Starboard Investment vs. Dimensional ETF Trust |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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