Correlation Between McDonalds and Bausch
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By analyzing existing cross correlation between McDonalds and Bausch Health Companies, you can compare the effects of market volatilities on McDonalds and Bausch 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 Bausch. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Bausch.
Diversification Opportunities for McDonalds and Bausch
Very good diversification
The 3 months correlation between McDonalds and Bausch is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies 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 Bausch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of McDonalds i.e., McDonalds and Bausch go up and down completely randomly.
Pair Corralation between McDonalds and Bausch
Considering the 90-day investment horizon McDonalds is expected to generate 6.61 times less return on investment than Bausch. But when comparing it to its historical volatility, McDonalds is 2.38 times less risky than Bausch. It trades about 0.05 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,924 in Bausch Health Companies on September 9, 2024 and sell it today you would earn a total of 874.00 from holding Bausch Health Companies or generate 17.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 75.38% |
Values | Daily Returns |
McDonalds vs. Bausch Health Companies
Performance |
Timeline |
McDonalds |
Bausch Health Companies |
McDonalds and Bausch Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with McDonalds and Bausch
The main advantage of trading using opposite McDonalds and Bausch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Bausch 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 Bausch will offset losses from the drop in Bausch's long position.McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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