Correlation Between McDonalds and EQRx

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

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

Diversification Opportunities for McDonalds and EQRx

0.0

Correlation Coefficient

McDonalds  EQRx

Pay attention - limited upside

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

Pair Corralation between McDonalds and EQRx

If you would invest  29,244  in McDonalds on December 1, 2024 and sell it today you would earn a total of  1,589  from holding McDonalds or generate 5.43% return on investment over 90 days.

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

McDonalds  vs.  EQRx Inc

McDonalds

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in McDonalds are ranked lower than 6 (%) 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.

EQRx Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days EQRx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, EQRx is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with McDonalds and EQRx

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

The idea behind McDonalds and EQRx Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.