Correlation Between McDonalds and PEPSICO
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By analyzing existing cross correlation between McDonalds and PEPSICO INC, you can compare the effects of market volatilities on McDonalds and PEPSICO 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 PEPSICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and PEPSICO.
Diversification Opportunities for McDonalds and PEPSICO
Poor diversification
The 3 months correlation between McDonalds and PEPSICO is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and PEPSICO INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPSICO INC 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 PEPSICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEPSICO INC has no effect on the direction of McDonalds i.e., McDonalds and PEPSICO go up and down completely randomly.
Pair Corralation between McDonalds and PEPSICO
Considering the 90-day investment horizon McDonalds is expected to generate 209.37 times less return on investment than PEPSICO. But when comparing it to its historical volatility, McDonalds is 88.59 times less risky than PEPSICO. It trades about 0.03 of its potential returns per unit of risk. PEPSICO INC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,452 in PEPSICO INC on August 31, 2024 and sell it today you would lose (660.00) from holding PEPSICO INC or give up 7.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 52.83% |
| Values | Daily Returns |
McDonalds vs. PEPSICO INC
Performance |
| Timeline |
| McDonalds |
| PEPSICO INC |
McDonalds and PEPSICO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and PEPSICO
The main advantage of trading using opposite McDonalds and PEPSICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, PEPSICO 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 PEPSICO will offset losses from the drop in PEPSICO's long position.| McDonalds vs. RLJ Lodging Trust | McDonalds vs. Aquagold International | McDonalds vs. Stepstone Group | McDonalds vs. Morningstar Unconstrained Allocation |
| PEPSICO vs. AEP TEX INC | PEPSICO vs. US BANK NATIONAL | PEPSICO vs. Bank of America | PEPSICO vs. GE Aerospace |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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