Correlation Between McDonalds and Strategy Shares

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

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

Diversification Opportunities for McDonalds and Strategy Shares

-0.55

Correlation Coefficient

McDonalds  Strategy Shares

Excellent diversification

The 3 months correlation between McDonalds and Strategy is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Strategy Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares 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 Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares has no effect on the direction of McDonalds i.e., McDonalds and Strategy Shares go up and down completely randomly.

Pair Corralation between McDonalds and Strategy Shares

Considering the 90-day investment horizon McDonalds is expected to under-perform the Strategy Shares. In addition to that, McDonalds is 2.19 times more volatile than Strategy Shares. It trades about -0.06 of its total potential returns per unit of risk. Strategy Shares is currently generating about 0.14 per unit of volatility. If you would invest  2,453  in Strategy Shares on May 5, 2025 and sell it today you would earn a total of  90.00  from holding Strategy Shares or generate 3.67% return on investment over 90 days.

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

McDonalds  vs.  Strategy Shares

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.

Strategy Shares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Strategy Shares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with McDonalds and Strategy Shares

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

The idea behind McDonalds and Strategy Shares 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.