Correlation Between McDonalds and Innovator ETFs
Can any of the company-specific risk be diversified away by investing in both McDonalds and Innovator ETFs 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 Innovator ETFs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Innovator ETFs Trust, you can compare the effects of market volatilities on McDonalds and Innovator ETFs 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 Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Innovator ETFs.
Diversification Opportunities for McDonalds and Innovator ETFs
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McDonalds and Innovator is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs 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 Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of McDonalds i.e., McDonalds and Innovator ETFs go up and down completely randomly.
Pair Corralation between McDonalds and Innovator ETFs
Considering the 90-day investment horizon McDonalds is expected to generate 2.72 times more return on investment than Innovator ETFs. However, McDonalds is 2.72 times more volatile than Innovator ETFs Trust. It trades about 0.07 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.02 per unit of risk. If you would invest 29,211 in McDonalds on September 1, 2024 and sell it today you would earn a total of 390.00 from holding McDonalds or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Innovator ETFs Trust
Performance |
| Timeline |
| McDonalds |
| Innovator ETFs Trust |
McDonalds and Innovator ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Innovator ETFs
The main advantage of trading using opposite McDonalds and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Innovator ETFs 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 Innovator ETFs will offset losses from the drop in Innovator ETFs' long position.| McDonalds vs. The Wendys Co | McDonalds vs. Shake Shack | McDonalds vs. Papa Johns International | McDonalds vs. Darden Restaurants |
| Innovator ETFs vs. Direxion Daily MSCI | Innovator ETFs vs. Innovator MSCI Emerging | Innovator ETFs vs. Innovator MSCI Emerging | Innovator ETFs vs. Innovator MSCI Emerging |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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