Correlation Between Federated Mdt and McDonalds Corp

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

Diversification Opportunities for Federated Mdt and McDonalds Corp

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Federated and McDonalds is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt All and McDonalds Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds Corp and Federated Mdt 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 Federated Mdt All 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 Federated Mdt i.e., Federated Mdt and McDonalds Corp go up and down completely randomly.

Pair Corralation between Federated Mdt and McDonalds Corp

Assuming the 90 days horizon Federated Mdt All is expected to generate 1.51 times more return on investment than McDonalds Corp. However, Federated Mdt is 1.51 times more volatile than McDonalds Corp. It trades about -0.09 of its potential returns per unit of risk. McDonalds Corp is currently generating about -0.35 per unit of risk. If you would invest  3,353  in Federated Mdt All on July 9, 2022 and sell it today you would lose (128.00)  from holding Federated Mdt All or give up 3.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Federated Mdt All  vs.  McDonalds Corp

 Performance (%) 
       Timeline  
Federated Mdt All 
Federated Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mdt All are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Federated Mdt is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Federated 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 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

Federated Mdt and McDonalds Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Federated Mdt and McDonalds Corp

The main advantage of trading using opposite Federated Mdt and McDonalds Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Mdt 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.
Federated Mdt vs. Walt Disney
The idea behind Federated Mdt All 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. Amazon Inc
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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