Correlation Between PHILIP and McDonalds
Specify exactly 2 symbols:
By analyzing existing cross correlation between PHILIP MORRIS INTL and McDonalds, you can compare the effects of market volatilities on PHILIP 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 PHILIP with a short position of McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHILIP and McDonalds.
Diversification Opportunities for PHILIP and McDonalds
Significant diversification
The 3 months correlation between PHILIP and McDonalds is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding PHILIP MORRIS INTL and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds and PHILIP 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 PHILIP MORRIS INTL 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 PHILIP i.e., PHILIP and McDonalds go up and down completely randomly.
Pair Corralation between PHILIP and McDonalds
Assuming the 90 days trading horizon PHILIP is expected to generate 2.61 times less return on investment than McDonalds. But when comparing it to its historical volatility, PHILIP MORRIS INTL is 4.76 times less risky than McDonalds. It trades about 0.04 of its potential returns per unit of risk. McDonalds is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 27,876 in McDonalds on September 3, 2024 and sell it today you would earn a total of 1,368 from holding McDonalds or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.57% |
| Values | Daily Returns |
PHILIP MORRIS INTL vs. McDonalds
Performance |
| Timeline |
| PHILIP MORRIS INTL |
| McDonalds |
PHILIP and McDonalds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PHILIP and McDonalds
The main advantage of trading using opposite PHILIP and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHILIP 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.The idea behind PHILIP MORRIS INTL and McDonalds pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| McDonalds vs. Highway Holdings Limited | McDonalds vs. QCR Holdings | McDonalds vs. Partner Communications | McDonalds vs. Acumen Pharmaceuticals |
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.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |