Correlation Between Alvotech and MCDONALDS

Can any of the company-specific risk be diversified away by investing in both Alvotech 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 Alvotech and MCDONALDS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alvotech and MCDONALDS PORATION MTN, you can compare the effects of market volatilities on Alvotech 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 Alvotech with a short position of MCDONALDS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and MCDONALDS.

Diversification Opportunities for Alvotech and MCDONALDS

0.15

Correlation Coefficient

Alvotech  MCDONALDS

Average diversification

The 3 months correlation between Alvotech and MCDONALDS is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and MCDONALDS PORATION MTN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCDONALDS PORATION MTN and Alvotech 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 Alvotech 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 PORATION MTN has no effect on the direction of Alvotech i.e., Alvotech and MCDONALDS go up and down completely randomly.

Pair Corralation between Alvotech and MCDONALDS

Given the investment horizon of 90 days Alvotech is expected to generate 1.32 times less return on investment than MCDONALDS. But when comparing it to its historical volatility, Alvotech is 1.26 times less risky than MCDONALDS. It trades about 0.19 of its potential returns per unit of risk. MCDONALDS PORATION MTN is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  7,968  in MCDONALDS PORATION MTN on October 25, 2024 and sell it today you would earn a total of  470.00  from holding MCDONALDS PORATION MTN or generate 5.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alvotech  vs.  MCDONALDS PORATION MTN

Alvotech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Alvotech is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

MCDONALDS PORATION MTN

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MCDONALDS PORATION MTN are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MCDONALDS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alvotech and MCDONALDS

The main advantage of trading using opposite Alvotech and MCDONALDS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech 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's long position.

The idea behind Alvotech and MCDONALDS PORATION MTN 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..