Correlation Between McDonalds and Horizon Active

Can any of the company-specific risk be diversified away by investing in both McDonalds and Horizon Active 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 Horizon Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between McDonalds and Horizon Active Asset, you can compare the effects of market volatilities on McDonalds and Horizon Active 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 Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Horizon Active.

Diversification Opportunities for McDonalds and Horizon Active

-0.68

Correlation Coefficient

McDonalds  Horizon Active

Excellent diversification

The 3 months correlation between McDonalds and Horizon is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Horizon Active Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Asset 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 Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Asset has no effect on the direction of McDonalds i.e., McDonalds and Horizon Active go up and down completely randomly.

Pair Corralation between McDonalds and Horizon Active

Considering the 90-day investment horizon McDonalds is expected to under-perform the Horizon Active. In addition to that, McDonalds is 1.41 times more volatile than Horizon Active Asset. It trades about -0.06 of its total potential returns per unit of risk. Horizon Active Asset is currently generating about 0.23 per unit of volatility. If you would invest  1,289  in Horizon Active Asset on May 7, 2025 and sell it today you would earn a total of  128.00  from holding Horizon Active Asset or generate 9.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

McDonalds  vs.  Horizon Active Asset

McDonalds

Risk-Adjusted Performance

Very Weak

Over the last 90 days McDonalds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, McDonalds is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Horizon Active Asset

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Active Asset are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Horizon Active may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with McDonalds and Horizon Active

The main advantage of trading using opposite McDonalds and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Horizon Active 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 Horizon Active will offset losses from the drop in Horizon Active's long position.

The idea behind McDonalds and Horizon Active Asset 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.