Correlation Between McDonalds and Siren DIVCON

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

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

Diversification Opportunities for McDonalds and Siren DIVCON

0.04

Correlation Coefficient

McDonalds  Siren DIVCON

Significant diversification

The 3 months correlation between McDonalds and Siren is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Siren DIVCON Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siren DIVCON Dividend 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 Siren DIVCON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siren DIVCON Dividend has no effect on the direction of McDonalds i.e., McDonalds and Siren DIVCON go up and down completely randomly.

Pair Corralation between McDonalds and Siren DIVCON

Considering the 90-day investment horizon McDonalds is expected to under-perform the Siren DIVCON. But the stock apears to be less risky and, when comparing its historical volatility, McDonalds is 1.45 times less risky than Siren DIVCON. The stock trades about -0.09 of its potential returns per unit of risk. The Siren DIVCON Dividend is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,104  in Siren DIVCON Dividend on May 7, 2025 and sell it today you would earn a total of  249.00  from holding Siren DIVCON Dividend or generate 6.07% return on investment over 90 days.

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

McDonalds  vs.  Siren DIVCON Dividend

McDonalds

Risk-Adjusted Performance

Weakest

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.

Siren DIVCON Dividend

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Siren DIVCON Dividend are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Siren DIVCON may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with McDonalds and Siren DIVCON

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

The idea behind McDonalds and Siren DIVCON Dividend 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.