Correlation Between McDonalds and Gold
Can any of the company-specific risk be diversified away by investing in both McDonalds and Gold 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 Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Gold And Gemstone, you can compare the effects of market volatilities on McDonalds and Gold 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 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Gold.
Diversification Opportunities for McDonalds and Gold
Very good diversification
The 3 months correlation between McDonalds and Gold is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Gold And Gemstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Gemstone 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 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold And Gemstone has no effect on the direction of McDonalds i.e., McDonalds and Gold go up and down completely randomly.
Pair Corralation between McDonalds and Gold
Considering the 90-day investment horizon McDonalds is expected to generate 152.25 times less return on investment than Gold. But when comparing it to its historical volatility, McDonalds is 11.32 times less risky than Gold. It trades about 0.0 of its potential returns per unit of risk. Gold And Gemstone is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.06 in Gold And Gemstone on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Gold And Gemstone or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.57% |
| Values | Daily Returns |
McDonalds vs. Gold And Gemstone
Performance |
| Timeline |
| McDonalds |
| Gold And Gemstone |
McDonalds and Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Gold
The main advantage of trading using opposite McDonalds and Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Gold 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 Gold will offset losses from the drop in Gold's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
| Gold vs. Ascendant Resources | Gold vs. Cantex Mine Development | Gold vs. Amarc Resources | Gold vs. Sterling Metals Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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