Correlation Between McDonalds and Windtree Therapeutics
Can any of the company-specific risk be diversified away by investing in both McDonalds and Windtree Therapeutics 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 Windtree Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Windtree Therapeutics, you can compare the effects of market volatilities on McDonalds and Windtree Therapeutics 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 Windtree Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Windtree Therapeutics.
Diversification Opportunities for McDonalds and Windtree Therapeutics
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McDonalds and Windtree is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Windtree Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Windtree Therapeutics 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 Windtree Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Windtree Therapeutics has no effect on the direction of McDonalds i.e., McDonalds and Windtree Therapeutics go up and down completely randomly.
Pair Corralation between McDonalds and Windtree Therapeutics
Considering the 90-day investment horizon McDonalds is expected to generate 0.09 times more return on investment than Windtree Therapeutics. However, McDonalds is 11.67 times less risky than Windtree Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Windtree Therapeutics is currently generating about -0.04 per unit of risk. If you would invest 26,127 in McDonalds on August 30, 2024 and sell it today you would earn a total of 3,381 from holding McDonalds or generate 12.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Windtree Therapeutics
Performance |
| Timeline |
| McDonalds |
| Windtree Therapeutics |
McDonalds and Windtree Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Windtree Therapeutics
The main advantage of trading using opposite McDonalds and Windtree Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Windtree Therapeutics 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 Windtree Therapeutics will offset losses from the drop in Windtree Therapeutics' long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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