Correlation Between McDonalds and Akerna Corp

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

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

Diversification Opportunities for McDonalds and Akerna Corp

-0.31

Correlation Coefficient

McDonalds  Akerna Corp

Very good diversification

The 3 months correlation between McDonalds and Akerna is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Akerna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akerna Corp 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 Akerna Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akerna Corp has no effect on the direction of McDonalds i.e., McDonalds and Akerna Corp go up and down completely randomly.

Pair Corralation between McDonalds and Akerna Corp

If you would invest  28,552  in McDonalds on August 31, 2024 and sell it today you would earn a total of  956.00  from holding McDonalds or generate 3.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

McDonalds  vs.  Akerna Corp

McDonalds

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in McDonalds are ranked lower than 4 (%) 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 new stock price tumult, may contribute to shorter-term losses for the shareholders.

Akerna Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with McDonalds and Akerna Corp

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

The idea behind McDonalds and Akerna Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.