Correlation Between McDonalds and Pinstripes Holdings
Can any of the company-specific risk be diversified away by investing in both McDonalds and Pinstripes Holdings 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 Pinstripes Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Pinstripes Holdings, you can compare the effects of market volatilities on McDonalds and Pinstripes Holdings 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 Pinstripes Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Pinstripes Holdings.
Diversification Opportunities for McDonalds and Pinstripes Holdings
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between McDonalds and Pinstripes is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Pinstripes Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinstripes Holdings 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 Pinstripes Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinstripes Holdings has no effect on the direction of McDonalds i.e., McDonalds and Pinstripes Holdings go up and down completely randomly.
Pair Corralation between McDonalds and Pinstripes Holdings
Considering the 90-day investment horizon McDonalds is expected to under-perform the Pinstripes Holdings. But the stock apears to be less risky and, when comparing its historical volatility, McDonalds is 6.52 times less risky than Pinstripes Holdings. The stock trades about 0.0 of its potential returns per unit of risk. The Pinstripes Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Pinstripes Holdings on August 28, 2024 and sell it today you would earn a total of 3.00 from holding Pinstripes Holdings or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Pinstripes Holdings
Performance |
| Timeline |
| McDonalds |
| Pinstripes Holdings |
McDonalds and Pinstripes Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Pinstripes Holdings
The main advantage of trading using opposite McDonalds and Pinstripes Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Pinstripes Holdings 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 Pinstripes Holdings will offset losses from the drop in Pinstripes Holdings' long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
| Pinstripes Holdings vs. MGIC Investment Corp | Pinstripes Holdings vs. Highway Holdings Limited | Pinstripes Holdings vs. Flexible Solutions International | Pinstripes Holdings vs. Summit Materials |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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