Correlation Between McDonalds and MYR
Can any of the company-specific risk be diversified away by investing in both McDonalds and MYR 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 MYR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and MYR Group, you can compare the effects of market volatilities on McDonalds and MYR 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 MYR. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and MYR.
Diversification Opportunities for McDonalds and MYR
Modest diversification
The 3 months correlation between McDonalds and MYR is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group 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 MYR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYR Group has no effect on the direction of McDonalds i.e., McDonalds and MYR go up and down completely randomly.
Pair Corralation between McDonalds and MYR
Considering the 90-day investment horizon McDonalds is expected to generate 0.26 times more return on investment than MYR. However, McDonalds is 3.79 times less risky than MYR. It trades about -0.06 of its potential returns per unit of risk. MYR Group is currently generating about -0.03 per unit of risk. If you would invest 29,251 in McDonalds on November 3, 2024 and sell it today you would lose (381.00) from holding McDonalds or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. MYR Group
Performance |
| Timeline |
| McDonalds |
| MYR Group |
McDonalds and MYR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and MYR
The main advantage of trading using opposite McDonalds and MYR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, MYR 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 MYR will offset losses from the drop in MYR's long position.| McDonalds vs. ProShares Russell Dividend | McDonalds vs. United Rentals | McDonalds vs. Kforce Inc | McDonalds vs. The Ensign Group |
| MYR vs. Comfort Systems USA | MYR vs. Granite Construction Incorporated | MYR vs. Dycom Industries | MYR vs. MasTec Inc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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