Correlation Between McDonalds and Thor Explorations
Can any of the company-specific risk be diversified away by investing in both McDonalds and Thor Explorations 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 Thor Explorations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Thor Explorations, you can compare the effects of market volatilities on McDonalds and Thor Explorations 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 Thor Explorations. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Thor Explorations.
Diversification Opportunities for McDonalds and Thor Explorations
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between McDonalds and Thor is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Thor Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Explorations 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 Thor Explorations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Explorations has no effect on the direction of McDonalds i.e., McDonalds and Thor Explorations go up and down completely randomly.
Pair Corralation between McDonalds and Thor Explorations
Considering the 90-day investment horizon McDonalds is expected to generate 108.19 times less return on investment than Thor Explorations. But when comparing it to its historical volatility, McDonalds is 11.84 times less risky than Thor Explorations. It trades about 0.01 of its potential returns per unit of risk. Thor Explorations is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Thor Explorations on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Thor Explorations or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Thor Explorations
Performance |
| Timeline |
| McDonalds |
| Thor Explorations |
McDonalds and Thor Explorations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Thor Explorations
The main advantage of trading using opposite McDonalds and Thor Explorations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Thor Explorations 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 Thor Explorations will offset losses from the drop in Thor Explorations' long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
| Thor Explorations vs. Vertiv Holdings Co | Thor Explorations vs. Nasdaq Inc | Thor Explorations vs. McDonalds | Thor Explorations vs. Walmart |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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