Correlation Between McDonalds and SNM Gobal
Can any of the company-specific risk be diversified away by investing in both McDonalds and SNM Gobal 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 SNM Gobal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and SNM Gobal Holdings, you can compare the effects of market volatilities on McDonalds and SNM Gobal 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 SNM Gobal. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and SNM Gobal.
Diversification Opportunities for McDonalds and SNM Gobal
Pay attention - limited upside
The 3 months correlation between McDonalds and SNM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and SNM Gobal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNM Gobal 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 SNM Gobal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNM Gobal Holdings has no effect on the direction of McDonalds i.e., McDonalds and SNM Gobal go up and down completely randomly.
Pair Corralation between McDonalds and SNM Gobal
Considering the 90-day investment horizon McDonalds is expected to generate 91.72 times less return on investment than SNM Gobal. But when comparing it to its historical volatility, McDonalds is 20.62 times less risky than SNM Gobal. It trades about 0.02 of its potential returns per unit of risk. SNM Gobal Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.03 in SNM Gobal Holdings on September 12, 2024 and sell it today you would lose (0.02) from holding SNM Gobal Holdings or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. SNM Gobal Holdings
Performance |
| Timeline |
| McDonalds |
| SNM Gobal Holdings |
McDonalds and SNM Gobal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and SNM Gobal
The main advantage of trading using opposite McDonalds and SNM Gobal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, SNM Gobal 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 SNM Gobal will offset losses from the drop in SNM Gobal'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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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