Correlation Between McDonalds and MBGGR

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Can any of the company-specific risk be diversified away by investing in both McDonalds and MBGGR 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 MBGGR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and MBGGR 35 03 AUG 25, you can compare the effects of market volatilities on McDonalds and MBGGR 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 MBGGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and MBGGR.

Diversification Opportunities for McDonalds and MBGGR

McDonaldsMBGGRDiversified AwayMcDonaldsMBGGRDiversified Away100%
-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between McDonalds and MBGGR is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and MBGGR 35 03 AUG 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBGGR 35 03 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 MBGGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBGGR 35 03 has no effect on the direction of McDonalds i.e., McDonalds and MBGGR go up and down completely randomly.

Pair Corralation between McDonalds and MBGGR

Considering the 90-day investment horizon McDonalds is expected to generate 1.82 times more return on investment than MBGGR. However, McDonalds is 1.82 times more volatile than MBGGR 35 03 AUG 25. It trades about -0.05 of its potential returns per unit of risk. MBGGR 35 03 AUG 25 is currently generating about -0.23 per unit of risk. If you would invest  30,201  in McDonalds on October 9, 2024 and sell it today you would lose (1,267) from holding McDonalds or give up 4.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy25.81%
ValuesDaily Returns

McDonalds  vs.  MBGGR 35 03 AUG 25

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -4-2024
JavaScript chart by amCharts 3.21.15MCD 233851CB8
       Timeline  
McDonalds 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan285290295300305310315
MBGGR 35 03 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MBGGR 35 03 AUG 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for MBGGR 35 03 AUG 25 investors.
JavaScript chart by amCharts 3.21.15MayJunJulAugSepOctNovDecJanJunJulAugSepOctNovDecJan9797.59898.599

McDonalds and MBGGR Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.82-1.37-0.92-0.47-0.040.330.781.231.682.13 0.51.01.52.02.53.03.5
JavaScript chart by amCharts 3.21.15MCD 233851CB8
       Returns  

Pair Trading with McDonalds and MBGGR

The main advantage of trading using opposite McDonalds and MBGGR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, MBGGR 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 MBGGR will offset losses from the drop in MBGGR's long position.
The idea behind McDonalds and MBGGR 35 03 AUG 25 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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