Correlation Between McDonalds and Grindr Warrant

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

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

Diversification Opportunities for McDonalds and Grindr Warrant

-0.57

Correlation Coefficient

McDonalds  Grindr Warrant

Excellent diversification

The 3 months correlation between McDonalds and Grindr is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Grindr Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grindr Warrant 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 Grindr Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grindr Warrant has no effect on the direction of McDonalds i.e., McDonalds and Grindr Warrant go up and down completely randomly.

Pair Corralation between McDonalds and Grindr Warrant

Considering the 90-day investment horizon McDonalds is expected to generate 0.21 times more return on investment than Grindr Warrant. However, McDonalds is 4.76 times less risky than Grindr Warrant. It trades about -0.24 of its potential returns per unit of risk. Grindr Warrant is currently generating about -0.09 per unit of risk. If you would invest  29,129  in McDonalds on October 22, 2024 and sell it today you would lose (1,034) from holding McDonalds or give up 3.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

McDonalds  vs.  Grindr Warrant

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.

Grindr Warrant

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grindr Warrant are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Grindr Warrant unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with McDonalds and Grindr Warrant

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

The idea behind McDonalds and Grindr Warrant 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.