Correlation Between McDonalds and ProShares Decline
Can any of the company-specific risk be diversified away by investing in both McDonalds and ProShares Decline 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 ProShares Decline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and ProShares Decline of, you can compare the effects of market volatilities on McDonalds and ProShares Decline 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 ProShares Decline. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and ProShares Decline.
Diversification Opportunities for McDonalds and ProShares Decline
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McDonalds and ProShares is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and ProShares Decline of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Decline 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 ProShares Decline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Decline has no effect on the direction of McDonalds i.e., McDonalds and ProShares Decline go up and down completely randomly.
Pair Corralation between McDonalds and ProShares Decline
Considering the 90-day investment horizon McDonalds is expected to generate 0.92 times more return on investment than ProShares Decline. However, McDonalds is 1.08 times less risky than ProShares Decline. It trades about -0.03 of its potential returns per unit of risk. ProShares Decline of is currently generating about -0.23 per unit of risk. If you would invest 29,261 in McDonalds on August 26, 2024 and sell it today you would lose (233.00) from holding McDonalds or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. ProShares Decline of
Performance |
| Timeline |
| McDonalds |
| ProShares Decline |
McDonalds and ProShares Decline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and ProShares Decline
The main advantage of trading using opposite McDonalds and ProShares Decline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, ProShares Decline 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 ProShares Decline will offset losses from the drop in ProShares Decline's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
| ProShares Decline vs. ProShares Long OnlineShort | ProShares Decline vs. ProShares Short High | ProShares Decline vs. ProShares Short Real | ProShares Decline vs. ProShares Short Financials |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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