Correlation Between McDonalds and Cohen Steers
Can any of the company-specific risk be diversified away by investing in both McDonalds and Cohen Steers 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 Cohen Steers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Cohen Steers Closed, you can compare the effects of market volatilities on McDonalds and Cohen Steers 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 Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Cohen Steers.
Diversification Opportunities for McDonalds and Cohen Steers
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McDonalds and Cohen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Cohen Steers Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Closed 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 Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Closed has no effect on the direction of McDonalds i.e., McDonalds and Cohen Steers go up and down completely randomly.
Pair Corralation between McDonalds and Cohen Steers
Considering the 90-day investment horizon McDonalds is expected to generate 2.75 times less return on investment than Cohen Steers. In addition to that, McDonalds is 1.01 times more volatile than Cohen Steers Closed. It trades about 0.03 of its total potential returns per unit of risk. Cohen Steers Closed is currently generating about 0.07 per unit of volatility. If you would invest 934.00 in Cohen Steers Closed on August 27, 2024 and sell it today you would earn a total of 375.00 from holding Cohen Steers Closed or generate 40.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Cohen Steers Closed
Performance |
| Timeline |
| McDonalds |
| Cohen Steers Closed |
McDonalds and Cohen Steers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Cohen Steers
The main advantage of trading using opposite McDonalds and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Cohen Steers 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 Cohen Steers will offset losses from the drop in Cohen Steers' 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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