Correlation Between McDonalds and 26442CAR5

Can any of the company-specific risk be diversified away by investing in both McDonalds and 26442CAR5 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 26442CAR5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between McDonalds and DUKE ENERGY CAROLINAS, you can compare the effects of market volatilities on McDonalds and 26442CAR5 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 26442CAR5. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and 26442CAR5.

Diversification Opportunities for McDonalds and 26442CAR5

-0.3

Correlation Coefficient

McDonalds  26442CAR5

Very good diversification

The 3 months correlation between McDonalds and 26442CAR5 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and DUKE ENERGY CAROLINAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY CAROLINAS 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 26442CAR5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY CAROLINAS has no effect on the direction of McDonalds i.e., McDonalds and 26442CAR5 go up and down completely randomly.

Pair Corralation between McDonalds and 26442CAR5

Considering the 90-day investment horizon McDonalds is expected to generate 0.61 times more return on investment than 26442CAR5. However, McDonalds is 1.64 times less risky than 26442CAR5. It trades about 0.07 of its potential returns per unit of risk. DUKE ENERGY CAROLINAS is currently generating about -0.14 per unit of risk. If you would invest  29,311  in McDonalds on December 26, 2024 and sell it today you would earn a total of  1,381  from holding McDonalds or generate 4.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.33%
Values	Daily Returns

McDonalds  vs.  DUKE ENERGY CAROLINAS

McDonalds

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in McDonalds are ranked lower than 5 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DUKE ENERGY CAROLINAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for DUKE ENERGY CAROLINAS investors.

Pair Trading with McDonalds and 26442CAR5

The main advantage of trading using opposite McDonalds and 26442CAR5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, 26442CAR5 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 26442CAR5 will offset losses from the drop in 26442CAR5's long position.

The idea behind McDonalds and DUKE ENERGY CAROLINAS 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..