Correlation Between McDonalds and EMQQ Emerging
Can any of the company-specific risk be diversified away by investing in both McDonalds and EMQQ Emerging 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 EMQQ Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and EMQQ The Emerging, you can compare the effects of market volatilities on McDonalds and EMQQ Emerging 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 EMQQ Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and EMQQ Emerging.
Diversification Opportunities for McDonalds and EMQQ Emerging
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McDonalds and EMQQ is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and EMQQ The Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMQQ The Emerging 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 EMQQ Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMQQ The Emerging has no effect on the direction of McDonalds i.e., McDonalds and EMQQ Emerging go up and down completely randomly.
Pair Corralation between McDonalds and EMQQ Emerging
Considering the 90-day investment horizon McDonalds is expected to generate 2.3 times less return on investment than EMQQ Emerging. But when comparing it to its historical volatility, McDonalds is 1.26 times less risky than EMQQ Emerging. It trades about 0.03 of its potential returns per unit of risk. EMQQ The Emerging is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,108 in EMQQ The Emerging on August 29, 2024 and sell it today you would earn a total of 676.00 from holding EMQQ The Emerging or generate 21.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. EMQQ The Emerging
Performance |
| Timeline |
| McDonalds |
| EMQQ The Emerging |
McDonalds and EMQQ Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and EMQQ Emerging
The main advantage of trading using opposite McDonalds and EMQQ Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, EMQQ Emerging 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 EMQQ Emerging will offset losses from the drop in EMQQ Emerging's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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