Correlation Between McDonalds and FEDEX
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By analyzing existing cross correlation between McDonalds and FEDEX P 405, you can compare the effects of market volatilities on McDonalds and FEDEX 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 FEDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and FEDEX.
Diversification Opportunities for McDonalds and FEDEX
Very good diversification
The 3 months correlation between McDonalds and FEDEX is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and FEDEX P 405 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEDEX P 405 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 FEDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEDEX P 405 has no effect on the direction of McDonalds i.e., McDonalds and FEDEX go up and down completely randomly.
Pair Corralation between McDonalds and FEDEX
Considering the 90-day investment horizon McDonalds is expected to generate 0.96 times more return on investment than FEDEX. However, McDonalds is 1.05 times less risky than FEDEX. It trades about 0.1 of its potential returns per unit of risk. FEDEX P 405 is currently generating about -0.03 per unit of risk. If you would invest 25,823 in McDonalds on September 1, 2024 and sell it today you would earn a total of 3,778 from holding McDonalds or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.03% |
| Values | Daily Returns |
McDonalds vs. FEDEX P 405
Performance |
| Timeline |
| McDonalds |
| FEDEX P 405 |
McDonalds and FEDEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and FEDEX
The main advantage of trading using opposite McDonalds and FEDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, FEDEX 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 FEDEX will offset losses from the drop in FEDEX's long position.| McDonalds vs. The Wendys Co | McDonalds vs. Shake Shack | McDonalds vs. Papa Johns International | McDonalds vs. Darden Restaurants |
| FEDEX vs. Chipotle Mexican Grill | FEDEX vs. Dennys Corp | FEDEX vs. Weibo Corp | FEDEX vs. The Cheesecake Factory |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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