Correlation Between McDonalds and Okeanis Eco
Can any of the company-specific risk be diversified away by investing in both McDonalds and Okeanis Eco 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 Okeanis Eco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Okeanis Eco Tankers, you can compare the effects of market volatilities on McDonalds and Okeanis Eco 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 Okeanis Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Okeanis Eco.
Diversification Opportunities for McDonalds and Okeanis Eco
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between McDonalds and Okeanis is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Okeanis Eco Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okeanis Eco Tankers 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 Okeanis Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okeanis Eco Tankers has no effect on the direction of McDonalds i.e., McDonalds and Okeanis Eco go up and down completely randomly.
Pair Corralation between McDonalds and Okeanis Eco
Considering the 90-day investment horizon McDonalds is expected to generate 1.38 times less return on investment than Okeanis Eco. But when comparing it to its historical volatility, McDonalds is 3.05 times less risky than Okeanis Eco. It trades about 0.08 of its potential returns per unit of risk. Okeanis Eco Tankers is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,358 in Okeanis Eco Tankers on November 22, 2024 and sell it today you would earn a total of 88.00 from holding Okeanis Eco Tankers or generate 3.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
McDonalds vs. Okeanis Eco Tankers
Performance |
Timeline |
McDonalds |
Okeanis Eco Tankers |
McDonalds and Okeanis Eco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with McDonalds and Okeanis Eco
The main advantage of trading using opposite McDonalds and Okeanis Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Okeanis Eco 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 Okeanis Eco will offset losses from the drop in Okeanis Eco's long position.McDonalds vs. Chipotle Mexican Grill | ||
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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