Correlation Between McDonalds and JLM Couture
Can any of the company-specific risk be diversified away by investing in both McDonalds and JLM Couture 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 JLM Couture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and JLM Couture, you can compare the effects of market volatilities on McDonalds and JLM Couture 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 JLM Couture. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and JLM Couture.
Diversification Opportunities for McDonalds and JLM Couture
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McDonalds and JLM is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and JLM Couture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLM Couture 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 JLM Couture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLM Couture has no effect on the direction of McDonalds i.e., McDonalds and JLM Couture go up and down completely randomly.
Pair Corralation between McDonalds and JLM Couture
If you would invest 29,521 in McDonalds on September 2, 2024 and sell it today you would earn a total of 80.00 from holding McDonalds or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
McDonalds vs. JLM Couture
Performance |
| Timeline |
| McDonalds |
| JLM Couture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
McDonalds and JLM Couture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and JLM Couture
The main advantage of trading using opposite McDonalds and JLM Couture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, JLM Couture 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 JLM Couture will offset losses from the drop in JLM Couture's long position.The idea behind McDonalds and JLM Couture pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| JLM Couture vs. Jerash Holdings | JLM Couture vs. Lakeland Industries | JLM Couture vs. Oxford Industries | JLM Couture vs. G III Apparel Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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