Correlation Between McDonalds and DBX ETF
Can any of the company-specific risk be diversified away by investing in both McDonalds and DBX ETF 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 DBX ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and DBX ETF Trust, you can compare the effects of market volatilities on McDonalds and DBX ETF 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 DBX ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and DBX ETF.
Diversification Opportunities for McDonalds and DBX ETF
Poor diversification
The 3 months correlation between McDonalds and DBX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and DBX ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBX ETF Trust 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 DBX ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBX ETF Trust has no effect on the direction of McDonalds i.e., McDonalds and DBX ETF go up and down completely randomly.
Pair Corralation between McDonalds and DBX ETF
Considering the 90-day investment horizon McDonalds is expected to generate 3.02 times less return on investment than DBX ETF. In addition to that, McDonalds is 1.67 times more volatile than DBX ETF Trust. It trades about 0.07 of its total potential returns per unit of risk. DBX ETF Trust is currently generating about 0.35 per unit of volatility. If you would invest 2,708 in DBX ETF Trust on September 1, 2024 and sell it today you would earn a total of 118.00 from holding DBX ETF Trust or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. DBX ETF Trust
Performance |
| Timeline |
| McDonalds |
| DBX ETF Trust |
McDonalds and DBX ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and DBX ETF
The main advantage of trading using opposite McDonalds and DBX ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, DBX ETF 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 DBX ETF will offset losses from the drop in DBX ETF's long position.| McDonalds vs. The Wendys Co | McDonalds vs. Shake Shack | McDonalds vs. Papa Johns International | McDonalds vs. Darden Restaurants |
| DBX ETF vs. Franklin Templeton ETF | DBX ETF vs. Altrius Global Dividend | DBX ETF vs. Invesco Exchange Traded | DBX ETF vs. Franklin International Core |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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