Correlation Between McDonalds and Acropolis Infrastructure

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

By analyzing existing cross correlation between McDonalds and Acropolis Infrastructure Acquisition, you can compare the effects of market volatilities on McDonalds and Acropolis Infrastructure 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 Acropolis Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Acropolis Infrastructure.

Diversification Opportunities for McDonalds and Acropolis Infrastructure

0.0

Correlation Coefficient

McDonalds  Acropolis Infrastructure

Pay attention - limited upside

The 3 months correlation between McDonalds and Acropolis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Acropolis Infrastructure Acqui in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acropolis Infrastructure 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 Acropolis Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acropolis Infrastructure has no effect on the direction of McDonalds i.e., McDonalds and Acropolis Infrastructure go up and down completely randomly.

Pair Corralation between McDonalds and Acropolis Infrastructure

Considering the 90-day investment horizon McDonalds is expected to generate 3.14 times more return on investment than Acropolis Infrastructure. However, McDonalds is 3.14 times more volatile than Acropolis Infrastructure Acquisition. It trades about 0.02 of its potential returns per unit of risk. Acropolis Infrastructure Acquisition is currently generating about 0.03 per unit of risk. If you would invest  25,861  in McDonalds on October 21, 2024 and sell it today you would earn a total of  2,234  from holding McDonalds or generate 8.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	24.6%
Values	Daily Returns

McDonalds  vs.  Acropolis Infrastructure Acqui

McDonalds

Risk-Adjusted Performance

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Very Weak

Over the last 90 days McDonalds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Acropolis Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acropolis Infrastructure Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Acropolis Infrastructure is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with McDonalds and Acropolis Infrastructure

The main advantage of trading using opposite McDonalds and Acropolis Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Acropolis Infrastructure 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 Acropolis Infrastructure will offset losses from the drop in Acropolis Infrastructure's long position.

The idea behind McDonalds and Acropolis Infrastructure Acquisition 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.