Correlation Between McDonalds Holdings and Good Times
Can any of the company-specific risk be diversified away by investing in both McDonalds Holdings and Good Times 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 Holdings and Good Times into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds Holdings and Good Times Restaurants, you can compare the effects of market volatilities on McDonalds Holdings and Good Times 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 Holdings with a short position of Good Times. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds Holdings and Good Times.
Diversification Opportunities for McDonalds Holdings and Good Times
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between McDonalds and Good is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds Holdings and Good Times Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Times Restaurants and McDonalds Holdings 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 Holdings are associated (or correlated) with Good Times. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Times Restaurants has no effect on the direction of McDonalds Holdings i.e., McDonalds Holdings and Good Times go up and down completely randomly.
Pair Corralation between McDonalds Holdings and Good Times
Assuming the 90 days horizon McDonalds Holdings is expected to under-perform the Good Times. But the pink sheet apears to be less risky and, when comparing its historical volatility, McDonalds Holdings is 2.09 times less risky than Good Times. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Good Times Restaurants is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 253.00 in Good Times Restaurants on August 30, 2024 and sell it today you would earn a total of 17.00 from holding Good Times Restaurants or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds Holdings vs. Good Times Restaurants
Performance |
| Timeline |
| McDonalds Holdings |
| Good Times Restaurants |
McDonalds Holdings and Good Times Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds Holdings and Good Times
The main advantage of trading using opposite McDonalds Holdings and Good Times positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds Holdings position performs unexpectedly, Good Times 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 Good Times will offset losses from the drop in Good Times' long position.| McDonalds Holdings vs. McDonalds | McDonalds Holdings vs. Starbucks | McDonalds Holdings vs. Chipotle Mexican Grill | McDonalds Holdings vs. Yum Brands |
| Good Times vs. Nathans Famous | Good Times vs. FAT Brands | Good Times vs. El Pollo Loco | Good Times vs. Ark Restaurants Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |