Correlation Between McDonalds and Jack In
Can any of the company-specific risk be diversified away by investing in both McDonalds and Jack In 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 Jack In into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Jack In The, you can compare the effects of market volatilities on McDonalds and Jack In 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 Jack In. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Jack In.
Diversification Opportunities for McDonalds and Jack In
Very good diversification
The 3 months correlation between McDonalds and Jack is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Jack In The in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack In 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 Jack In. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack In has no effect on the direction of McDonalds i.e., McDonalds and Jack In go up and down completely randomly.
Pair Corralation between McDonalds and Jack In
Considering the 90-day investment horizon McDonalds is expected to generate 0.36 times more return on investment than Jack In. However, McDonalds is 2.78 times less risky than Jack In. It trades about -0.11 of its potential returns per unit of risk. Jack In The is currently generating about -0.09 per unit of risk. If you would invest 29,679 in McDonalds on August 27, 2024 and sell it today you would lose (651.00) from holding McDonalds or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Jack In The
Performance |
| Timeline |
| McDonalds |
| Jack In |
McDonalds and Jack In Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Jack In
The main advantage of trading using opposite McDonalds and Jack In positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Jack In 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 Jack In will offset losses from the drop in Jack In's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
| Jack In vs. Dine Brands Global | Jack In vs. Bloomin Brands | Jack In vs. BJs Restaurants | Jack In vs. The Cheesecake Factory |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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