Correlation Between McDonalds and WPLAU

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

By analyzing existing cross correlation between McDonalds and WPLAU 37 15 SEP 26, you can compare the effects of market volatilities on McDonalds and WPLAU 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 WPLAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and WPLAU.

Diversification Opportunities for McDonalds and WPLAU

-0.44

Correlation Coefficient

McDonalds  WPLAU

Very good diversification

The 3 months correlation between McDonalds and WPLAU is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and WPLAU 37 15 SEP 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPLAU 37 15 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 WPLAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPLAU 37 15 has no effect on the direction of McDonalds i.e., McDonalds and WPLAU go up and down completely randomly.

Pair Corralation between McDonalds and WPLAU

Considering the 90-day investment horizon McDonalds is expected to under-perform the WPLAU. In addition to that, McDonalds is 4.15 times more volatile than WPLAU 37 15 SEP 26. It trades about 0.0 of its total potential returns per unit of risk. WPLAU 37 15 SEP 26 is currently generating about 0.02 per unit of volatility. If you would invest  9,838  in WPLAU 37 15 SEP 26 on September 19, 2024 and sell it today you would earn a total of  17.00  from holding WPLAU 37 15 SEP 26 or generate 0.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	48.44%
Values	Daily Returns

McDonalds  vs.  WPLAU 37 15 SEP 26

McDonalds

Risk-Adjusted Performance

0 of 100

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.

WPLAU 37 15

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WPLAU 37 15 SEP 26 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, WPLAU is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with McDonalds and WPLAU

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

The idea behind McDonalds and WPLAU 37 15 SEP 26 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.