Correlation Between McDonalds Corp and High Liner
Can any of the company-specific risk be diversified away by investing in both McDonalds Corp and High Liner 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 High Liner 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 High Liner Foods, you can compare the effects of market volatilities on McDonalds Corp and High Liner 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 High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds Corp and High Liner.
Diversification Opportunities for McDonalds Corp and High Liner
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McDonalds and High is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds Corp CDR and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods 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 High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of McDonalds Corp i.e., McDonalds Corp and High Liner go up and down completely randomly.
Pair Corralation between McDonalds Corp and High Liner
Assuming the 90 days trading horizon McDonalds Corp is expected to generate 5.76 times less return on investment than High Liner. But when comparing it to its historical volatility, McDonalds Corp CDR is 1.38 times less risky than High Liner. It trades about 0.05 of its potential returns per unit of risk. High Liner Foods is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,296 in High Liner Foods on September 12, 2024 and sell it today you would earn a total of 282.00 from holding High Liner Foods or generate 21.76% 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. High Liner Foods
Performance |
| Timeline |
| McDonalds Corp CDR |
| High Liner Foods |
McDonalds Corp and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds Corp and High Liner
The main advantage of trading using opposite McDonalds Corp and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds Corp position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| McDonalds Corp vs. Apple Inc CDR | McDonalds Corp vs. NVIDIA CDR | McDonalds Corp vs. Microsoft Corp CDR | McDonalds Corp vs. Amazon CDR |
| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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