Correlation Between Caf De and McDonalds

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

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

Diversification Opportunities for Caf De and McDonalds

0.0

Correlation Coefficient

Caf De  McDonalds

Pay attention - limited upside

The 3 months correlation between Caf and McDonalds is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caf De Coral and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds and Caf De 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 Caf De Coral 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 Caf De i.e., Caf De and McDonalds go up and down completely randomly.

Pair Corralation between Caf De and McDonalds

If you would invest  28,962  in McDonalds on December 22, 2024 and sell it today you would earn a total of  1,582  from holding McDonalds or generate 5.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Caf De Coral  vs.  McDonalds

Caf De Coral

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caf De Coral has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Caf De is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

McDonalds

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in McDonalds are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, McDonalds is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Caf De and McDonalds

The main advantage of trading using opposite Caf De and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caf De 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 Caf De Coral 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.