Correlation Between McDonalds and Mayfair Gold
Can any of the company-specific risk be diversified away by investing in both McDonalds and Mayfair Gold 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 Mayfair Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Mayfair Gold Corp, you can compare the effects of market volatilities on McDonalds and Mayfair Gold 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 Mayfair Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Mayfair Gold.
Diversification Opportunities for McDonalds and Mayfair Gold
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between McDonalds and Mayfair is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Mayfair Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfair Gold Corp 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 Mayfair Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfair Gold Corp has no effect on the direction of McDonalds i.e., McDonalds and Mayfair Gold go up and down completely randomly.
Pair Corralation between McDonalds and Mayfair Gold
Considering the 90-day investment horizon McDonalds is expected to generate 0.44 times more return on investment than Mayfair Gold. However, McDonalds is 2.25 times less risky than Mayfair Gold. It trades about 0.02 of its potential returns per unit of risk. Mayfair Gold Corp is currently generating about -0.36 per unit of risk. 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Mayfair Gold Corp
Performance |
| Timeline |
| McDonalds |
| Mayfair Gold Corp |
McDonalds and Mayfair Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Mayfair Gold
The main advantage of trading using opposite McDonalds and Mayfair Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Mayfair Gold 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 Mayfair Gold will offset losses from the drop in Mayfair Gold's long position.The idea behind McDonalds and Mayfair Gold Corp 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.| Mayfair Gold vs. Agnico Eagle Mines | Mayfair Gold vs. B2Gold Corp | Mayfair Gold vs. Pan American Silver | Mayfair Gold vs. Gold Fields Ltd |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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