Correlation Between Catalent and MCDONALDS

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

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

Diversification Opportunities for Catalent and MCDONALDS

0.0

Correlation Coefficient

Catalent  MCDONALDS

Pay attention - limited upside

The 3 months correlation between Catalent and MCDONALDS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Catalent 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 Catalent 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 Catalent 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 Catalent i.e., Catalent and MCDONALDS go up and down completely randomly.

Pair Corralation between Catalent and MCDONALDS

If you would invest  6,070  in Catalent on September 3, 2024 and sell it today you would earn a total of  41.00  from holding Catalent or generate 0.68% return on investment over 90 days.

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

Catalent  vs.  MCDONALDS PORATION MTN

Catalent

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

MCDONALDS PORATION MTN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCDONALDS PORATION MTN has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Catalent and MCDONALDS

The main advantage of trading using opposite Catalent and MCDONALDS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent 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 Catalent 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.