Correlation Between Polarityte and McDonalds

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

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

Diversification Opportunities for Polarityte and McDonalds

0.52

Correlation Coefficient

Polarityte  McDonalds

Very weak diversification

The 3 months correlation between Polarityte and McDonalds is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Polarityte and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds and Polarityte 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 Polarityte are associated (or correlated) with McDonalds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds has no effect on the direction of Polarityte i.e., Polarityte and McDonalds go up and down completely randomly.

Pair Corralation between Polarityte and McDonalds

If you would invest  6.66  in Polarityte on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Polarityte or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Polarityte  vs.  McDonalds

Polarityte

Risk-Adjusted Performance

0 of 100

Very Weak

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

McDonalds

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Polarityte and McDonalds

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

The idea behind Polarityte and McDonalds 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.