Correlation Between McDonalds Corp and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both McDonalds Corp and Medical Facilities 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 Corp and Medical Facilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds Corp CDR and Medical Facilities, you can compare the effects of market volatilities on McDonalds Corp and Medical Facilities 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 Corp with a short position of Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds Corp and Medical Facilities.
Diversification Opportunities for McDonalds Corp and Medical Facilities
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between McDonalds and Medical is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds Corp CDR and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities and McDonalds Corp 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 Corp CDR are associated (or correlated) with Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of McDonalds Corp i.e., McDonalds Corp and Medical Facilities go up and down completely randomly.
Pair Corralation between McDonalds Corp and Medical Facilities
Assuming the 90 days trading horizon McDonalds Corp CDR is expected to under-perform the Medical Facilities. But the stock apears to be less risky and, when comparing its historical volatility, McDonalds Corp CDR is 2.05 times less risky than Medical Facilities. The stock trades about -0.11 of its potential returns per unit of risk. The Medical Facilities is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,488 in Medical Facilities on October 24, 2024 and sell it today you would earn a total of 167.00 from holding Medical Facilities or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds Corp CDR vs. Medical Facilities
Performance |
| Timeline |
| McDonalds Corp CDR |
| Medical Facilities |
McDonalds Corp and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds Corp and Medical Facilities
The main advantage of trading using opposite McDonalds Corp and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds Corp position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.| McDonalds Corp vs. Ramp Metals | McDonalds Corp vs. NeXGold Mining Corp | McDonalds Corp vs. Nicola Mining |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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