Correlation Between McDonalds and Parkway Acquisition
Can any of the company-specific risk be diversified away by investing in both McDonalds and Parkway Acquisition 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 Parkway Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Parkway Acquisition Corp, you can compare the effects of market volatilities on McDonalds and Parkway Acquisition 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 Parkway Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Parkway Acquisition.
Diversification Opportunities for McDonalds and Parkway Acquisition
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McDonalds and Parkway is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Parkway Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkway Acquisition 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 Parkway Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkway Acquisition Corp has no effect on the direction of McDonalds i.e., McDonalds and Parkway Acquisition go up and down completely randomly.
Pair Corralation between McDonalds and Parkway Acquisition
If you would invest 25,572 in McDonalds on August 29, 2024 and sell it today you would earn a total of 3,936 from holding McDonalds or generate 15.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.79% |
| Values | Daily Returns |
McDonalds vs. Parkway Acquisition Corp
Performance |
| Timeline |
| McDonalds |
| Parkway Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
McDonalds and Parkway Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Parkway Acquisition
The main advantage of trading using opposite McDonalds and Parkway Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Parkway Acquisition 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 Parkway Acquisition will offset losses from the drop in Parkway Acquisition's 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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