Correlation Between McDonalds and IShares MSCI

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

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

Diversification Opportunities for McDonalds and IShares MSCI

0.61

Correlation Coefficient

McDonalds  IShares MSCI

Poor diversification

The 3 months correlation between McDonalds and IShares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and IShares MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares MSCI World 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares MSCI World has no effect on the direction of McDonalds i.e., McDonalds and IShares MSCI go up and down completely randomly.

Pair Corralation between McDonalds and IShares MSCI

If you would invest  29,028  in McDonalds on September 18, 2024 and sell it today you would earn a total of  743.00  from holding McDonalds or generate 2.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

McDonalds  vs.  IShares MSCI World

McDonalds

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in McDonalds are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

IShares MSCI World

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IShares MSCI World has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, IShares MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with McDonalds and IShares MSCI

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

The idea behind McDonalds and IShares MSCI World 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.