Correlation Between McDonalds and Eline Entertainment
Can any of the company-specific risk be diversified away by investing in both McDonalds and Eline Entertainment 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 Eline Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Eline Entertainment Group, you can compare the effects of market volatilities on McDonalds and Eline Entertainment 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 Eline Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Eline Entertainment.
Diversification Opportunities for McDonalds and Eline Entertainment
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McDonalds and Eline is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Eline Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eline Entertainment 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 Eline Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eline Entertainment has no effect on the direction of McDonalds i.e., McDonalds and Eline Entertainment go up and down completely randomly.
Pair Corralation between McDonalds and Eline Entertainment
Considering the 90-day investment horizon McDonalds is expected to generate 548.49 times less return on investment than Eline Entertainment. But when comparing it to its historical volatility, McDonalds is 64.47 times less risky than Eline Entertainment. It trades about 0.02 of its potential returns per unit of risk. Eline Entertainment Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Eline Entertainment Group on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Eline Entertainment Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Eline Entertainment Group
Performance |
| Timeline |
| McDonalds |
| Eline Entertainment |
McDonalds and Eline Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Eline Entertainment
The main advantage of trading using opposite McDonalds and Eline Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Eline Entertainment 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 Eline Entertainment will offset losses from the drop in Eline Entertainment's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
| Eline Entertainment vs. Roku Inc | Eline Entertainment vs. SNM Gobal Holdings | Eline Entertainment vs. Seven Arts Entertainment | Eline Entertainment vs. All For One |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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