Correlation Between Sweetgreen and McDonalds
Can any of the company-specific risk be diversified away by investing in both Sweetgreen 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 Sweetgreen and McDonalds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sweetgreen and McDonalds, you can compare the effects of market volatilities on Sweetgreen 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 Sweetgreen with a short position of McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sweetgreen and McDonalds.
Diversification Opportunities for Sweetgreen and McDonalds
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sweetgreen and McDonalds is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds and Sweetgreen 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 Sweetgreen 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 Sweetgreen i.e., Sweetgreen and McDonalds go up and down completely randomly.
Pair Corralation between Sweetgreen and McDonalds
Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 5.03 times more return on investment than McDonalds. However, Sweetgreen is 5.03 times more volatile than McDonalds. It trades about 0.05 of its potential returns per unit of risk. McDonalds is currently generating about 0.03 per unit of risk. If you would invest 3,805 in Sweetgreen on September 4, 2024 and sell it today you would earn a total of 118.00 from holding Sweetgreen or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sweetgreen vs. McDonalds
Performance |
| Timeline |
| Sweetgreen |
| McDonalds |
Sweetgreen and McDonalds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sweetgreen and McDonalds
The main advantage of trading using opposite Sweetgreen and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen 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.| Sweetgreen vs. Cannae Holdings | Sweetgreen vs. Brinker International | Sweetgreen vs. Jack In The | Sweetgreen vs. Biglari Holdings |
| McDonalds vs. Hyatt Hotels | McDonalds vs. Smart Share Global | McDonalds vs. Sweetgreen | McDonalds vs. Wyndham Hotels Resorts |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |