Correlation Between Oakmark Select and McDonalds Corp

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

Diversification Opportunities for Oakmark Select and McDonalds Corp

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Oakmark and McDonalds is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Select and McDonalds Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds Corp and Oakmark Select 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 Oakmark Select are associated (or correlated) with McDonalds Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds Corp has no effect on the direction of Oakmark Select i.e., Oakmark Select and McDonalds Corp go up and down completely randomly.

Pair Corralation between Oakmark Select and McDonalds Corp

Assuming the 90 days horizon Oakmark Select is expected to generate 1.24 times more return on investment than McDonalds Corp. However, Oakmark Select is 1.24 times more volatile than McDonalds Corp. It trades about 0.03 of its potential returns per unit of risk. McDonalds Corp is currently generating about 0.02 per unit of risk. If you would invest  3,995  in Oakmark Select on June 30, 2022 and sell it today you would earn a total of  774.00  from holding Oakmark Select or generate 19.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.8%
ValuesDaily Returns

Oakmark Select  vs.  McDonalds Corp

 Performance (%) 
       Timeline  
Oakmark Select 
Oakmark Performance
0 of 100
Over the last 90 days Oakmark Select has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Oakmark Select is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Oakmark Price Channel

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 rather sound fundamental indicators, McDonalds Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

McDonalds Price Channel

Oakmark Select and McDonalds Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oakmark Select and McDonalds Corp

The main advantage of trading using opposite Oakmark Select and McDonalds Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark Select position performs unexpectedly, McDonalds Corp 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 Corp will offset losses from the drop in McDonalds Corp's long position.
Oakmark Select vs. Dupont Denemours
The idea behind Oakmark Select and McDonalds Corp 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.
McDonalds Corp vs. Kibush Capital 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

Other Complementary Tools

Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Go
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Commodity Channel Index
Use Commodity Channel Index to analyze current equity momentum
Go