Correlation Between McDonalds Corp and Disney

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both McDonalds Corp and Disney 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 Corp and Disney into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds Corp and Walt Disney, you can compare the effects of market volatilities on McDonalds Corp and Disney 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 Corp with a short position of Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds Corp and Disney.

Diversification Opportunities for McDonalds Corp and Disney

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between McDonalds and Disney is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds Corp and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and McDonalds Corp 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 Corp are associated (or correlated) with Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of McDonalds Corp i.e., McDonalds Corp and Disney go up and down completely randomly.

Pair Corralation between McDonalds Corp and Disney

Considering the 90-day investment horizon McDonalds Corp is expected to generate 0.55 times more return on investment than Disney. However, McDonalds Corp is 1.81 times less risky than Disney. It trades about 0.02 of its potential returns per unit of risk. Walt Disney is currently generating about -0.01 per unit of risk. If you would invest  21,729  in McDonalds Corp on July 1, 2022 and sell it today you would earn a total of  1,965  from holding McDonalds Corp or generate 9.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

McDonalds Corp  vs.  Walt Disney

 Performance (%) 
       Timeline  
McDonalds Corp 
McDonalds Performance
0 of 100
Over the last 90 days McDonalds Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

McDonalds Price Channel

Walt Disney 
Disney Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Disney is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Disney Price Channel

McDonalds Corp and Disney Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with McDonalds Corp and Disney

The main advantage of trading using opposite McDonalds Corp and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds Corp position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.
McDonalds Corp vs. Amazon Inc
The idea behind McDonalds Corp and Walt Disney 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.
Disney vs. Live Nation Entertainment
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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

Other Complementary Tools

Transaction History
View history of all your transactions and understand their impact on performance
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
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
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go