Correlation Between McDonalds and Dine Brands
Can any of the company-specific risk be diversified away by investing in both McDonalds and Dine Brands 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 Dine Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Dine Brands Global, you can compare the effects of market volatilities on McDonalds and Dine Brands 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 Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Dine Brands.
Diversification Opportunities for McDonalds and Dine Brands
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between McDonalds and Dine is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global 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 Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of McDonalds i.e., McDonalds and Dine Brands go up and down completely randomly.
Pair Corralation between McDonalds and Dine Brands
Considering the 90-day investment horizon McDonalds is expected to under-perform the Dine Brands. But the stock apears to be less risky and, when comparing its historical volatility, McDonalds is 4.27 times less risky than Dine Brands. The stock trades about -0.02 of its potential returns per unit of risk. The Dine Brands Global is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,118 in Dine Brands Global on August 29, 2024 and sell it today you would earn a total of 389.00 from holding Dine Brands Global or generate 12.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Dine Brands Global
Performance |
| Timeline |
| McDonalds |
| Dine Brands Global |
McDonalds and Dine Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Dine Brands
The main advantage of trading using opposite McDonalds and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Dine Brands 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 Dine Brands will offset losses from the drop in Dine Brands' 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |