Correlation Between McDonalds and Niagara Mohawk
Can any of the company-specific risk be diversified away by investing in both McDonalds and Niagara Mohawk 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 Niagara Mohawk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Niagara Mohawk Power, you can compare the effects of market volatilities on McDonalds and Niagara Mohawk 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 Niagara Mohawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Niagara Mohawk.
Diversification Opportunities for McDonalds and Niagara Mohawk
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between McDonalds and Niagara is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Niagara Mohawk Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niagara Mohawk Power 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 Niagara Mohawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niagara Mohawk Power has no effect on the direction of McDonalds i.e., McDonalds and Niagara Mohawk go up and down completely randomly.
Pair Corralation between McDonalds and Niagara Mohawk
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 | 100.0% |
| Values | Daily Returns |
McDonalds vs. Niagara Mohawk Power
Performance |
| Timeline |
| McDonalds |
| Niagara Mohawk Power |
McDonalds and Niagara Mohawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Niagara Mohawk
The main advantage of trading using opposite McDonalds and Niagara Mohawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Niagara Mohawk 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 Niagara Mohawk will offset losses from the drop in Niagara Mohawk's long position.| McDonalds vs. The Wendys Co | McDonalds vs. Shake Shack | McDonalds vs. Papa Johns International | McDonalds vs. Darden Restaurants |
| Niagara Mohawk vs. Legacy Education | Niagara Mohawk vs. Apple Inc | Niagara Mohawk vs. NVIDIA | Niagara Mohawk vs. Microsoft |
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 Stocks Directory module to find actively traded stocks across global markets.
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