Correlation Between McDonalds and Forwardly
Can any of the company-specific risk be diversified away by investing in both McDonalds and Forwardly 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 Forwardly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Forwardly, you can compare the effects of market volatilities on McDonalds and Forwardly 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 Forwardly. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Forwardly.
Diversification Opportunities for McDonalds and Forwardly
Very good diversification
The 3 months correlation between McDonalds and Forwardly is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Forwardly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forwardly 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 Forwardly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forwardly has no effect on the direction of McDonalds i.e., McDonalds and Forwardly go up and down completely randomly.
Pair Corralation between McDonalds and Forwardly
Considering the 90-day investment horizon McDonalds is expected to generate 6.17 times less return on investment than Forwardly. But when comparing it to its historical volatility, McDonalds is 9.14 times less risky than Forwardly. It trades about 0.02 of its potential returns per unit of risk. Forwardly is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1.99 in Forwardly on August 31, 2024 and sell it today you would lose (1.28) from holding Forwardly or give up 64.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Forwardly
Performance |
| Timeline |
| McDonalds |
| Forwardly |
McDonalds and Forwardly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Forwardly
The main advantage of trading using opposite McDonalds and Forwardly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Forwardly 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 Forwardly will offset losses from the drop in Forwardly's long position.| McDonalds vs. RLJ Lodging Trust | McDonalds vs. Aquagold International | McDonalds vs. Stepstone Group | McDonalds vs. Morningstar Unconstrained Allocation |
| Forwardly vs. American Leisure Holdings | Forwardly vs. Supurva Healthcare Group | Forwardly vs. China Health Management | Forwardly vs. Embrace Change Acquisition |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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