Correlation Between Newhydrogen and McDonalds
Can any of the company-specific risk be diversified away by investing in both Newhydrogen and McDonalds 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 Newhydrogen and McDonalds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newhydrogen and McDonalds, you can compare the effects of market volatilities on Newhydrogen and McDonalds 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 Newhydrogen with a short position of McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newhydrogen and McDonalds.
Diversification Opportunities for Newhydrogen and McDonalds
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Newhydrogen and McDonalds is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Newhydrogen and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds and Newhydrogen 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 Newhydrogen are associated (or correlated) with McDonalds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds has no effect on the direction of Newhydrogen i.e., Newhydrogen and McDonalds go up and down completely randomly.
Pair Corralation between Newhydrogen and McDonalds
Given the investment horizon of 90 days Newhydrogen is expected to generate 8.57 times more return on investment than McDonalds. However, Newhydrogen is 8.57 times more volatile than McDonalds. It trades about 0.01 of its potential returns per unit of risk. McDonalds is currently generating about 0.08 per unit of risk. If you would invest 0.66 in Newhydrogen on November 4, 2024 and sell it today you would lose (0.25) from holding Newhydrogen or give up 37.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newhydrogen vs. McDonalds
Performance |
| Timeline |
| Newhydrogen |
| McDonalds |
Newhydrogen and McDonalds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newhydrogen and McDonalds
The main advantage of trading using opposite Newhydrogen and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newhydrogen position performs unexpectedly, McDonalds 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 will offset losses from the drop in McDonalds' long position.| Newhydrogen vs. Solar Integrated Roofing | Newhydrogen vs. Ascent Solar Technologies, | Newhydrogen vs. SunHydrogen | Newhydrogen vs. Solar Alliance Energy |
| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dominos Pizza Common | McDonalds vs. Yum Brands | McDonalds vs. The Wendys Co |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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