Correlation Between National Bank and McDonalds Corp
Can any of the company-specific risk be diversified away by investing in both National Bank and McDonalds Corp 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 National Bank and McDonalds Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and McDonalds Corp CDR, you can compare the effects of market volatilities on National Bank and McDonalds Corp 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 National Bank with a short position of McDonalds Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and McDonalds Corp.
Diversification Opportunities for National Bank and McDonalds Corp
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and McDonalds is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and McDonalds Corp CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds Corp CDR and National Bank 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 National Bank of are associated (or correlated) with McDonalds Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds Corp CDR has no effect on the direction of National Bank i.e., National Bank and McDonalds Corp go up and down completely randomly.
Pair Corralation between National Bank and McDonalds Corp
Assuming the 90 days trading horizon National Bank of is expected to generate 1.06 times more return on investment than McDonalds Corp. However, National Bank is 1.06 times more volatile than McDonalds Corp CDR. It trades about 0.08 of its potential returns per unit of risk. McDonalds Corp CDR is currently generating about 0.03 per unit of risk. If you would invest 1,630 in National Bank of on November 2, 2024 and sell it today you would earn a total of 865.00 from holding National Bank of or generate 53.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. McDonalds Corp CDR
Performance |
| Timeline |
| National Bank |
| McDonalds Corp CDR |
National Bank and McDonalds Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and McDonalds Corp
The main advantage of trading using opposite National Bank and McDonalds Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, McDonalds Corp 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 McDonalds Corp will offset losses from the drop in McDonalds Corp's long position.| National Bank vs. Leading Edge Materials | National Bank vs. Canadian Utilities Limited | National Bank vs. Costco Wholesale Corp | National Bank vs. Algonquin Power Utilities |
| McDonalds Corp vs. Rogers Communications | McDonalds Corp vs. Dream Industrial Real | McDonalds Corp vs. XXIX Metal Corp | McDonalds Corp vs. Hemisphere Energy |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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