Correlation Between McDonalds and Track
Can any of the company-specific risk be diversified away by investing in both McDonalds and Track 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 Track into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Track Group, you can compare the effects of market volatilities on McDonalds and Track 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 Track. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Track.
Diversification Opportunities for McDonalds and Track
Very good diversification
The 3 months correlation between McDonalds and Track is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Track Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Track Group 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 Track. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Track Group has no effect on the direction of McDonalds i.e., McDonalds and Track go up and down completely randomly.
Pair Corralation between McDonalds and Track
Considering the 90-day investment horizon McDonalds is expected to under-perform the Track. But the stock apears to be less risky and, when comparing its historical volatility, McDonalds is 6.29 times less risky than Track. The stock trades about -0.2 of its potential returns per unit of risk. The Track Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Track Group on October 23, 2024 and sell it today you would earn a total of 2.00 from holding Track Group or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
McDonalds vs. Track Group
Performance |
| Timeline |
| McDonalds |
| Track Group |
McDonalds and Track Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Track
The main advantage of trading using opposite McDonalds and Track positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Track 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 Track will offset losses from the drop in Track's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Yum Brands | McDonalds vs. The Wendys Co | McDonalds vs. Wingstop |
| Track vs. Spectris plc | Track vs. Sono Tek Corp | Track vs. Genasys | Track vs. Sensata Technologies Holding |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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