Correlation Between McDonalds and FG Group
Can any of the company-specific risk be diversified away by investing in both McDonalds and FG Group 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 FG Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and FG Group Holdings, you can compare the effects of market volatilities on McDonalds and FG Group 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 FG Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and FG Group.
Diversification Opportunities for McDonalds and FG Group
Very good diversification
The 3 months correlation between McDonalds and FGH is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and FG Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Group Holdings 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 FG Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Group Holdings has no effect on the direction of McDonalds i.e., McDonalds and FG Group go up and down completely randomly.
Pair Corralation between McDonalds and FG Group
Considering the 90-day investment horizon McDonalds is expected to generate 0.27 times more return on investment than FG Group. However, McDonalds is 3.68 times less risky than FG Group. It trades about 0.03 of its potential returns per unit of risk. FG Group Holdings is currently generating about -0.07 per unit of risk. If you would invest 26,342 in McDonalds on September 3, 2024 and sell it today you would earn a total of 3,259 from holding McDonalds or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 30.91% |
| Values | Daily Returns |
McDonalds vs. FG Group Holdings
Performance |
| Timeline |
| McDonalds |
| FG Group Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
McDonalds and FG Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and FG Group
The main advantage of trading using opposite McDonalds and FG Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, FG Group 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 FG Group will offset losses from the drop in FG Group's long position.| McDonalds vs. Highway Holdings Limited | McDonalds vs. QCR Holdings | McDonalds vs. Partner Communications | McDonalds vs. Acumen Pharmaceuticals |
| FG Group vs. OneSpaWorld Holdings | FG Group vs. Games Workshop Group | FG Group vs. Johnson Outdoors | FG Group vs. American Outdoor 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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