Correlation Between McDonalds and VictoryShares Emerging
Can any of the company-specific risk be diversified away by investing in both McDonalds and VictoryShares Emerging 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 VictoryShares Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and VictoryShares Emerging Markets, you can compare the effects of market volatilities on McDonalds and VictoryShares Emerging 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 VictoryShares Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and VictoryShares Emerging.
Diversification Opportunities for McDonalds and VictoryShares Emerging
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McDonalds and VictoryShares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and VictoryShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares Emerging 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 VictoryShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares Emerging has no effect on the direction of McDonalds i.e., McDonalds and VictoryShares Emerging go up and down completely randomly.
Pair Corralation between McDonalds and VictoryShares Emerging
Considering the 90-day investment horizon McDonalds is expected to generate 0.98 times more return on investment than VictoryShares Emerging. However, McDonalds is 1.02 times less risky than VictoryShares Emerging. It trades about 0.0 of its potential returns per unit of risk. VictoryShares Emerging Markets is currently generating about -0.15 per unit of risk. If you would invest 29,679 in McDonalds on August 29, 2024 and sell it today you would lose (46.00) from holding McDonalds or give up 0.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. VictoryShares Emerging Markets
Performance |
| Timeline |
| McDonalds |
| VictoryShares Emerging |
McDonalds and VictoryShares Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and VictoryShares Emerging
The main advantage of trading using opposite McDonalds and VictoryShares Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, VictoryShares Emerging 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 VictoryShares Emerging will offset losses from the drop in VictoryShares Emerging's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |