Correlation Between McDonalds and Newcore Gold
Can any of the company-specific risk be diversified away by investing in both McDonalds and Newcore 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 Newcore Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Newcore Gold, you can compare the effects of market volatilities on McDonalds and Newcore 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 Newcore Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Newcore Gold.
Diversification Opportunities for McDonalds and Newcore Gold
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between McDonalds and Newcore is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Newcore Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcore Gold 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 Newcore Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newcore Gold has no effect on the direction of McDonalds i.e., McDonalds and Newcore Gold go up and down completely randomly.
Pair Corralation between McDonalds and Newcore Gold
Considering the 90-day investment horizon McDonalds is expected to generate 0.23 times more return on investment than Newcore Gold. However, McDonalds is 4.37 times less risky than Newcore Gold. It trades about 0.07 of its potential returns per unit of risk. Newcore Gold is currently generating about -0.07 per unit of risk. If you would invest 29,211 in McDonalds on September 1, 2024 and sell it today you would earn a total of 390.00 from holding McDonalds or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
McDonalds vs. Newcore Gold
Performance |
| Timeline |
| McDonalds |
| Newcore Gold |
McDonalds and Newcore Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Newcore Gold
The main advantage of trading using opposite McDonalds and Newcore Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Newcore 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 Newcore Gold will offset losses from the drop in Newcore Gold's long position.| McDonalds vs. The Wendys Co | McDonalds vs. Shake Shack | McDonalds vs. Papa Johns International | McDonalds vs. Darden Restaurants |
| Newcore Gold vs. Aurion Resources | Newcore Gold vs. Rio2 Limited | Newcore Gold vs. Palamina Corp | Newcore Gold vs. BTU Metals Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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