Correlation Between Gelsenwasser and McDonalds
Can any of the company-specific risk be diversified away by investing in both Gelsenwasser 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 Gelsenwasser and McDonalds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gelsenwasser AG and McDonalds, you can compare the effects of market volatilities on Gelsenwasser 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 Gelsenwasser with a short position of McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gelsenwasser and McDonalds.
Diversification Opportunities for Gelsenwasser and McDonalds
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gelsenwasser and McDonalds is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Gelsenwasser AG and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds and Gelsenwasser 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 Gelsenwasser AG 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 Gelsenwasser i.e., Gelsenwasser and McDonalds go up and down completely randomly.
Pair Corralation between Gelsenwasser and McDonalds
Assuming the 90 days horizon Gelsenwasser is expected to generate 2.09 times less return on investment than McDonalds. In addition to that, Gelsenwasser is 2.58 times more volatile than McDonalds. It trades about 0.01 of its total potential returns per unit of risk. McDonalds is currently generating about 0.08 per unit of volatility. If you would invest 27,275 in McDonalds on August 30, 2024 and sell it today you would earn a total of 975.00 from holding McDonalds or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gelsenwasser AG vs. McDonalds
Performance |
| Timeline |
| Gelsenwasser AG |
| McDonalds |
Gelsenwasser and McDonalds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gelsenwasser and McDonalds
The main advantage of trading using opposite Gelsenwasser and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gelsenwasser 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.| Gelsenwasser vs. ECHO INVESTMENT ZY | Gelsenwasser vs. REINET INVESTMENTS SCA | Gelsenwasser vs. Strategic Investments AS | Gelsenwasser vs. National Beverage Corp |
| McDonalds vs. DiamondRock Hospitality | McDonalds vs. The Boston Beer | McDonalds vs. SHIP HEALTHCARE HLDGINC | McDonalds vs. National Health Investors |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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