Correlation Between McDonalds and VCLO
Can any of the company-specific risk be diversified away by investing in both McDonalds and VCLO 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 VCLO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and VCLO, you can compare the effects of market volatilities on McDonalds and VCLO 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 VCLO. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and VCLO.
Diversification Opportunities for McDonalds and VCLO
Very good diversification
The 3 months correlation between McDonalds and VCLO is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and VCLO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VCLO 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 VCLO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VCLO has no effect on the direction of McDonalds i.e., McDonalds and VCLO go up and down completely randomly.
Pair Corralation between McDonalds and VCLO
If you would invest 28,124 in McDonalds on August 26, 2024 and sell it today you would earn a total of 904.00 from holding McDonalds or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.3% |
| Values | Daily Returns |
McDonalds vs. VCLO
Performance |
| Timeline |
| McDonalds |
| VCLO |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
McDonalds and VCLO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and VCLO
The main advantage of trading using opposite McDonalds and VCLO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, VCLO 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 VCLO will offset losses from the drop in VCLO's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
| VCLO vs. FT Vest Equity | VCLO vs. Zillow Group Class | VCLO vs. Northern Lights | VCLO vs. VanEck Vectors Moodys |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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