Correlation Between McDonalds and Chijet
Can any of the company-specific risk be diversified away by investing in both McDonalds and Chijet 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 Chijet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Chijet Motor Company,, you can compare the effects of market volatilities on McDonalds and Chijet 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 Chijet. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Chijet.
Diversification Opportunities for McDonalds and Chijet
Excellent diversification
The 3 months correlation between McDonalds and Chijet is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Chijet Motor Company, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chijet Motor , 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 Chijet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chijet Motor , has no effect on the direction of McDonalds i.e., McDonalds and Chijet go up and down completely randomly.
Pair Corralation between McDonalds and Chijet
Considering the 90-day investment horizon McDonalds is expected to generate 0.1 times more return on investment than Chijet. However, McDonalds is 10.25 times less risky than Chijet. It trades about 0.03 of its potential returns per unit of risk. Chijet Motor Company, is currently generating about -0.05 per unit of risk. If you would invest 25,964 in McDonalds on August 28, 2024 and sell it today you would earn a total of 3,655 from holding McDonalds or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Chijet Motor Company,
Performance |
| Timeline |
| McDonalds |
| Chijet Motor , |
McDonalds and Chijet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Chijet
The main advantage of trading using opposite McDonalds and Chijet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Chijet 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 Chijet will offset losses from the drop in Chijet's 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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