Correlation Between McDonalds and QNB Corp

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

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

Diversification Opportunities for McDonalds and QNB Corp

-0.46

Correlation Coefficient

McDonalds  QNB Corp

Very good diversification

The 3 months correlation between McDonalds and QNB is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and QNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QNB 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 QNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QNB Corp has no effect on the direction of McDonalds i.e., McDonalds and QNB Corp go up and down completely randomly.

Pair Corralation between McDonalds and QNB Corp

Considering the 90-day investment horizon McDonalds is expected to generate 13.34 times less return on investment than QNB Corp. In addition to that, McDonalds is 1.7 times more volatile than QNB Corp. It trades about 0.01 of its total potential returns per unit of risk. QNB Corp is currently generating about 0.27 per unit of volatility. If you would invest  2,967  in QNB Corp on September 13, 2024 and sell it today you would earn a total of  343.00  from holding QNB Corp or generate 11.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

McDonalds  vs.  QNB Corp

McDonalds

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days McDonalds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, McDonalds is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

QNB Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in QNB Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, QNB Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with McDonalds and QNB Corp

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

The idea behind McDonalds and QNB 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.