Correlation Between McDonalds and Arconic
Can any of the company-specific risk be diversified away by investing in both McDonalds and Arconic 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 Arconic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Arconic, you can compare the effects of market volatilities on McDonalds and Arconic 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 Arconic. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Arconic.
Diversification Opportunities for McDonalds and Arconic
Pay attention - limited upside
The 3 months correlation between McDonalds and Arconic is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Arconic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arconic 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 Arconic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arconic has no effect on the direction of McDonalds i.e., McDonalds and Arconic go up and down completely randomly.
Pair Corralation between McDonalds and Arconic
If you would invest 2,999 in Arconic on January 30, 2024 and sell it today you would earn a total of 0.00 from holding Arconic or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 4.55% |
Values | Daily Returns |
McDonalds vs. Arconic
Performance |
Timeline |
McDonalds |
Arconic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
McDonalds and Arconic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with McDonalds and Arconic
The main advantage of trading using opposite McDonalds and Arconic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Arconic 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 Arconic will offset losses from the drop in Arconic's long position.McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
Arconic vs. Carpenter Technology | Arconic vs. Haynes International | Arconic vs. Worthington Industries | Arconic vs. Ryerson Holding Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
Stocks Directory Find actively traded stocks across global markets | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |