Correlation Between McDonalds and Revlon
Can any of the company-specific risk be diversified away by investing in both McDonalds and Revlon 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 Revlon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Revlon Inc, you can compare the effects of market volatilities on McDonalds and Revlon 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 Revlon. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Revlon.
Diversification Opportunities for McDonalds and Revlon
Pay attention - limited upside
The 3 months correlation between McDonalds and Revlon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Revlon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revlon Inc 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 Revlon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revlon Inc has no effect on the direction of McDonalds i.e., McDonalds and Revlon go up and down completely randomly.
Pair Corralation between McDonalds and Revlon
If you would invest (100.00) in Revlon Inc on October 22, 2024 and sell it today you would earn a total of 100.00 from holding Revlon Inc or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
McDonalds vs. Revlon Inc
Performance |
| Timeline |
| McDonalds |
| Revlon Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
McDonalds and Revlon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Revlon
The main advantage of trading using opposite McDonalds and Revlon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Revlon 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 Revlon will offset losses from the drop in Revlon's long position.| McDonalds vs. Roche Holding AG | McDonalds vs. Champions Oncology | McDonalds vs. Target 2030 Fund | McDonalds vs. The Monarch Cement |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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