Correlation Between McDonalds and Killbuck Bancshares
Can any of the company-specific risk be diversified away by investing in both McDonalds and Killbuck Bancshares 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 Killbuck Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Killbuck Bancshares, you can compare the effects of market volatilities on McDonalds and Killbuck Bancshares 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 Killbuck Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Killbuck Bancshares.
Diversification Opportunities for McDonalds and Killbuck Bancshares
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between McDonalds and Killbuck is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Killbuck Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Killbuck Bancshares 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 Killbuck Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Killbuck Bancshares has no effect on the direction of McDonalds i.e., McDonalds and Killbuck Bancshares go up and down completely randomly.
Pair Corralation between McDonalds and Killbuck Bancshares
Considering the 90-day investment horizon McDonalds is expected to generate 0.1 times more return on investment than Killbuck Bancshares. However, McDonalds is 9.94 times less risky than Killbuck Bancshares. It trades about -0.06 of its potential returns per unit of risk. Killbuck Bancshares is currently generating about -0.09 per unit of risk. If you would invest 29,218 in McDonalds on November 7, 2024 and sell it today you would lose (348.00) from holding McDonalds or give up 1.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
McDonalds vs. Killbuck Bancshares
Performance |
| Timeline |
| McDonalds |
| Killbuck Bancshares |
McDonalds and Killbuck Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Killbuck Bancshares
The main advantage of trading using opposite McDonalds and Killbuck Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Killbuck Bancshares 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 Killbuck Bancshares will offset losses from the drop in Killbuck Bancshares' long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dominos Pizza Common | McDonalds vs. Yum Brands | McDonalds vs. The Wendys Co |
| Killbuck Bancshares vs. Verra Mobility Corp | Killbuck Bancshares vs. Celsius Holdings | Killbuck Bancshares vs. LB Foster | Killbuck Bancshares vs. Primo Brands |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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