Correlation Between McDonalds and MICROSOFT
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By analyzing existing cross correlation between McDonalds and MICROSOFT PORATION, you can compare the effects of market volatilities on McDonalds and MICROSOFT 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 MICROSOFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and MICROSOFT.
Diversification Opportunities for McDonalds and MICROSOFT
Very weak diversification
The 3 months correlation between McDonalds and MICROSOFT is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and MICROSOFT PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MICROSOFT PORATION 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 MICROSOFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MICROSOFT PORATION has no effect on the direction of McDonalds i.e., McDonalds and MICROSOFT go up and down completely randomly.
Pair Corralation between McDonalds and MICROSOFT
Considering the 90-day investment horizon McDonalds is expected to generate 1.12 times less return on investment than MICROSOFT. But when comparing it to its historical volatility, McDonalds is 1.29 times less risky than MICROSOFT. It trades about 0.11 of its potential returns per unit of risk. MICROSOFT PORATION is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,378 in MICROSOFT PORATION on December 2, 2024 and sell it today you would earn a total of 395.00 from holding MICROSOFT PORATION or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
McDonalds vs. MICROSOFT PORATION
Performance |
| Timeline |
| McDonalds |
| MICROSOFT PORATION |
McDonalds and MICROSOFT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and MICROSOFT
The main advantage of trading using opposite McDonalds and MICROSOFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, MICROSOFT 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 MICROSOFT will offset losses from the drop in MICROSOFT's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Yum Brands | McDonalds vs. The Wendys Co | McDonalds vs. Wingstop |
| MICROSOFT vs. Arrow Electronics | MICROSOFT vs. Sea | MICROSOFT vs. KVH Industries | MICROSOFT vs. Dave Busters Entertainment |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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