Correlation Between McDonalds and Sientra
Can any of the company-specific risk be diversified away by investing in both McDonalds and Sientra 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 Sientra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Sientra, you can compare the effects of market volatilities on McDonalds and Sientra 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 Sientra. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Sientra.
Diversification Opportunities for McDonalds and Sientra
Pay attention - limited upside
The 3 months correlation between McDonalds and Sientra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Sientra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sientra 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 Sientra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sientra has no effect on the direction of McDonalds i.e., McDonalds and Sientra go up and down completely randomly.
Pair Corralation between McDonalds and Sientra
If you would invest 28,675 in McDonalds on November 21, 2024 and sell it today you would earn a total of 1,519 from holding McDonalds or generate 5.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
McDonalds vs. Sientra
Performance |
Timeline |
McDonalds |
Sientra |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
McDonalds and Sientra Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with McDonalds and Sientra
The main advantage of trading using opposite McDonalds and Sientra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Sientra 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 Sientra will offset losses from the drop in Sientra's long position.McDonalds vs. Chipotle Mexican Grill | ||
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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