Correlation Between McDonalds and Kaman

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

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

Diversification Opportunities for McDonalds and Kaman

0.0

Correlation Coefficient

McDonalds  Kaman

Pay attention - limited upside

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

Pair Corralation between McDonalds and Kaman

If you would invest  28,794  in McDonalds on December 28, 2024 and sell it today you would earn a total of  2,475  from holding McDonalds or generate 8.6% return on investment over 90 days.

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

McDonalds  vs.  Kaman

McDonalds

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in McDonalds are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, McDonalds may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kaman

Risk-Adjusted Performance

Very Weak

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

Pair Trading with McDonalds and Kaman

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

The idea behind McDonalds and Kaman 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.