Correlation Between McDonalds and KraneShares
Can any of the company-specific risk be diversified away by investing in both McDonalds and KraneShares 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 KraneShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and KraneShares, you can compare the effects of market volatilities on McDonalds and KraneShares 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 KraneShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and KraneShares.
Diversification Opportunities for McDonalds and KraneShares
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McDonalds and KraneShares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and KraneShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares 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 KraneShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares has no effect on the direction of McDonalds i.e., McDonalds and KraneShares go up and down completely randomly.
Pair Corralation between McDonalds and KraneShares
If you would invest 29,973 in McDonalds on September 12, 2024 and sell it today you would earn a total of 98.00 from holding McDonalds or generate 0.33% 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. KraneShares
Performance |
| Timeline |
| McDonalds |
| KraneShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
McDonalds and KraneShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and KraneShares
The main advantage of trading using opposite McDonalds and KraneShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, KraneShares 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 KraneShares will offset losses from the drop in KraneShares' long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
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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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