Correlation Between Resource America and McDonalds
Can any of the company-specific risk be diversified away by investing in both Resource America 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 Resource America and McDonalds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resource America and McDonalds, you can compare the effects of market volatilities on Resource America 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 Resource America with a short position of McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resource America and McDonalds.
Diversification Opportunities for Resource America and McDonalds
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Resource and McDonalds is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Resource America and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds and Resource America 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 Resource America 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 Resource America i.e., Resource America and McDonalds go up and down completely randomly.
Pair Corralation between Resource America and McDonalds
If you would invest (100.00) in Resource America on February 5, 2024 and sell it today you would earn a total of 100.00 from holding Resource America or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Resource America vs. McDonalds
Performance |
Timeline |
Resource America |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
McDonalds |
Resource America and McDonalds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Resource America and McDonalds
The main advantage of trading using opposite Resource America and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resource America 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.Resource America vs. Sapiens International | Resource America vs. Vector Group | Resource America vs. Anheuser Busch Inbev | Resource America vs. Constellation Brands Class |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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