Correlation Between McDonalds and The Emerging
Can any of the company-specific risk be diversified away by investing in both McDonalds and The Emerging 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 The Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and The Emerging Markets, you can compare the effects of market volatilities on McDonalds and The Emerging 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 The Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and The Emerging.
Diversification Opportunities for McDonalds and The Emerging
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McDonalds and The is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 The Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of McDonalds i.e., McDonalds and The Emerging go up and down completely randomly.
Pair Corralation between McDonalds and The Emerging
Considering the 90-day investment horizon McDonalds is expected to generate 1.36 times more return on investment than The Emerging. However, McDonalds is 1.36 times more volatile than The Emerging Markets. It trades about 0.07 of its potential returns per unit of risk. The Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest 26,600 in McDonalds on September 3, 2024 and sell it today you would earn a total of 3,001 from holding McDonalds or generate 11.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. The Emerging Markets
Performance |
| Timeline |
| McDonalds |
| Emerging Markets |
McDonalds and The Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and The Emerging
The main advantage of trading using opposite McDonalds and The Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, The Emerging 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 The Emerging will offset losses from the drop in The Emerging's long position.| McDonalds vs. Highway Holdings Limited | McDonalds vs. QCR Holdings | McDonalds vs. Partner Communications | McDonalds vs. Acumen Pharmaceuticals |
| The Emerging vs. Vanguard Total Stock | The Emerging vs. Vanguard 500 Index | The Emerging vs. Vanguard Total Stock | The Emerging vs. Vanguard Total Stock |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |