Correlation Between McDonalds and Global X

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

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

Diversification Opportunities for McDonalds and Global X

-0.41

Correlation Coefficient

McDonalds  Global X

Very good diversification

The 3 months correlation between McDonalds and Global is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Global X Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Blockchain 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Blockchain has no effect on the direction of McDonalds i.e., McDonalds and Global X go up and down completely randomly.

Pair Corralation between McDonalds and Global X

Considering the 90-day investment horizon McDonalds is expected to generate 54.05 times less return on investment than Global X. But when comparing it to its historical volatility, McDonalds is 3.76 times less risky than Global X. It trades about 0.01 of its potential returns per unit of risk. Global X Blockchain is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,391  in Global X Blockchain on October 24, 2024 and sell it today you would earn a total of  5,259  from holding Global X Blockchain or generate 219.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

McDonalds  vs.  Global X Blockchain

McDonalds

Risk-Adjusted Performance

0 of 100

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.

Global X Blockchain

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Blockchain are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Global X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with McDonalds and Global X

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

The idea behind McDonalds and Global X Blockchain 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.