Correlation Between Quizam Media and McDonalds

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

By analyzing existing cross correlation between Quizam Media and McDonalds, you can compare the effects of market volatilities on Quizam Media and McDonalds 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 Quizam Media with a short position of McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quizam Media and McDonalds.

Diversification Opportunities for Quizam Media and McDonalds

0.69

Correlation Coefficient

Quizam Media  McDonalds

Poor diversification

The 3 months correlation between Quizam and McDonalds is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Quizam Media and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds and Quizam Media 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 Quizam Media are associated (or correlated) with McDonalds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds has no effect on the direction of Quizam Media i.e., Quizam Media and McDonalds go up and down completely randomly.

Pair Corralation between Quizam Media and McDonalds

Assuming the 90 days horizon Quizam Media is expected to generate 12.77 times more return on investment than McDonalds. However, Quizam Media is 12.77 times more volatile than McDonalds. It trades about 0.11 of its potential returns per unit of risk. McDonalds is currently generating about 0.07 per unit of risk. If you would invest  1.74  in Quizam Media on December 23, 2024 and sell it today you would earn a total of  1.88  from holding Quizam Media or generate 108.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.85%
Values	Daily Returns

Quizam Media  vs.  McDonalds

Quizam Media

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quizam Media are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Quizam Media reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Quizam Media and McDonalds

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

The idea behind Quizam Media and McDonalds 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.