Correlation Between McDonalds and AUTONATION
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By analyzing existing cross correlation between McDonalds and AUTONATION INC 38, you can compare the effects of market volatilities on McDonalds and AUTONATION 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 AUTONATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and AUTONATION.
Diversification Opportunities for McDonalds and AUTONATION
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McDonalds and AUTONATION is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and AUTONATION INC 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTONATION INC 38 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 AUTONATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTONATION INC 38 has no effect on the direction of McDonalds i.e., McDonalds and AUTONATION go up and down completely randomly.
Pair Corralation between McDonalds and AUTONATION
Considering the 90-day investment horizon McDonalds is expected to generate 1.74 times more return on investment than AUTONATION. However, McDonalds is 1.74 times more volatile than AUTONATION INC 38. It trades about 0.02 of its potential returns per unit of risk. AUTONATION INC 38 is currently generating about 0.01 per unit of risk. If you would invest 28,257 in McDonalds on October 7, 2024 and sell it today you would earn a total of 1,221 from holding McDonalds or generate 4.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 91.63% |
Values | Daily Returns |
McDonalds vs. AUTONATION INC 38
Performance |
Timeline |
McDonalds |
AUTONATION INC 38 |
McDonalds and AUTONATION Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with McDonalds and AUTONATION
The main advantage of trading using opposite McDonalds and AUTONATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, AUTONATION 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 AUTONATION will offset losses from the drop in AUTONATION's long position.McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Yum Brands | McDonalds vs. The Wendys Co | McDonalds vs. Wingstop |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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