Correlation Between McDonalds and Amada
Can any of the company-specific risk be diversified away by investing in both McDonalds and Amada 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 McDonalds and Amada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Amada Co, you can compare the effects of market volatilities on McDonalds and Amada 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 McDonalds with a short position of Amada. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Amada.
Diversification Opportunities for McDonalds and Amada
Very good diversification
The 3 months correlation between McDonalds and Amada is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Amada Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amada and McDonalds 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 McDonalds are associated (or correlated) with Amada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amada has no effect on the direction of McDonalds i.e., McDonalds and Amada go up and down completely randomly.
Pair Corralation between McDonalds and Amada
If you would invest 26,669 in McDonalds on February 5, 2024 and sell it today you would earn a total of 363.00 from holding McDonalds or generate 1.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
McDonalds vs. Amada Co
Performance |
Timeline |
McDonalds |
Amada |
McDonalds and Amada Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with McDonalds and Amada
The main advantage of trading using opposite McDonalds and Amada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Amada 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 Amada will offset losses from the drop in Amada's long position.McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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