Correlation Between McDonalds and Sixty North
Can any of the company-specific risk be diversified away by investing in both McDonalds and Sixty North 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 Sixty North into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Sixty North Gold, you can compare the effects of market volatilities on McDonalds and Sixty North 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 Sixty North. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Sixty North.
Diversification Opportunities for McDonalds and Sixty North
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between McDonalds and Sixty is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Sixty North Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixty North Gold 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 Sixty North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixty North Gold has no effect on the direction of McDonalds i.e., McDonalds and Sixty North go up and down completely randomly.
Pair Corralation between McDonalds and Sixty North
Considering the 90-day investment horizon McDonalds is expected to generate 0.18 times more return on investment than Sixty North. However, McDonalds is 5.55 times less risky than Sixty North. It trades about 0.19 of its potential returns per unit of risk. Sixty North Gold is currently generating about -0.38 per unit of risk. If you would invest 29,309 in McDonalds on November 27, 2024 and sell it today you would earn a total of 1,448 from holding McDonalds or generate 4.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Sixty North Gold
Performance |
| Timeline |
| McDonalds |
| Sixty North Gold |
McDonalds and Sixty North Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Sixty North
The main advantage of trading using opposite McDonalds and Sixty North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Sixty North 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 Sixty North will offset losses from the drop in Sixty North's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dominos Pizza Common | McDonalds vs. Yum Brands | McDonalds vs. The Wendys Co |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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