Correlation Between McDonalds and Dutch Bros
Can any of the company-specific risk be diversified away by investing in both McDonalds and Dutch Bros 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 Dutch Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Dutch Bros, you can compare the effects of market volatilities on McDonalds and Dutch Bros 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 Dutch Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Dutch Bros.
Diversification Opportunities for McDonalds and Dutch Bros
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between McDonalds and Dutch is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Dutch Bros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dutch Bros 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 Dutch Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dutch Bros has no effect on the direction of McDonalds i.e., McDonalds and Dutch Bros go up and down completely randomly.
Pair Corralation between McDonalds and Dutch Bros
Considering the 90-day investment horizon McDonalds is expected to generate 12.49 times less return on investment than Dutch Bros. But when comparing it to its historical volatility, McDonalds is 3.02 times less risky than Dutch Bros. It trades about 0.02 of its potential returns per unit of risk. Dutch Bros is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,673 in Dutch Bros on August 26, 2024 and sell it today you would earn a total of 2,447 from holding Dutch Bros or generate 91.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Dutch Bros
Performance |
| Timeline |
| McDonalds |
| Dutch Bros |
McDonalds and Dutch Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Dutch Bros
The main advantage of trading using opposite McDonalds and Dutch Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Dutch Bros 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 Dutch Bros will offset losses from the drop in Dutch Bros' long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
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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