Correlation Between McDonalds and NESNVX

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

By analyzing existing cross correlation between McDonalds and NESNVX 25 14 SEP 41, you can compare the effects of market volatilities on McDonalds and NESNVX 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 NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and NESNVX.

Diversification Opportunities for McDonalds and NESNVX

-0.46

Correlation Coefficient

McDonalds  NESNVX

Very good diversification

The 3 months correlation between McDonalds and NESNVX is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and NESNVX 25 14 SEP 41 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 25 14 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 NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 25 14 has no effect on the direction of McDonalds i.e., McDonalds and NESNVX go up and down completely randomly.

Pair Corralation between McDonalds and NESNVX

Considering the 90-day investment horizon McDonalds is expected to generate 0.41 times more return on investment than NESNVX. However, McDonalds is 2.44 times less risky than NESNVX. It trades about -0.04 of its potential returns per unit of risk. NESNVX 25 14 SEP 41 is currently generating about -0.32 per unit of risk. If you would invest  29,442  in McDonalds on September 25, 2024 and sell it today you would lose (174.00) from holding McDonalds or give up 0.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	30.0%
Values	Daily Returns

McDonalds  vs.  NESNVX 25 14 SEP 41

McDonalds

Risk-Adjusted Performance

0 of 100

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.

NESNVX 25 14

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 25 14 SEP 41 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for NESNVX 25 14 SEP 41 investors.

Pair Trading with McDonalds and NESNVX

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

The idea behind McDonalds and NESNVX 25 14 SEP 41 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .