Correlation Between American Outdoor and YETI Holdings

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

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

Diversification Opportunities for American Outdoor and YETI Holdings

0.65

Correlation Coefficient

American Outdoor  YETI Holdings

Poor diversification

The 3 months correlation between American and YETI is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Outdoor Brands and YETI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YETI Holdings and American Outdoor 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 American Outdoor Brands are associated (or correlated) with YETI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YETI Holdings has no effect on the direction of American Outdoor i.e., American Outdoor and YETI Holdings go up and down completely randomly.

Pair Corralation between American Outdoor and YETI Holdings

Given the investment horizon of 90 days American Outdoor Brands is expected to under-perform the YETI Holdings. In addition to that, American Outdoor is 1.79 times more volatile than YETI Holdings. It trades about -0.06 of its total potential returns per unit of risk. YETI Holdings is currently generating about -0.1 per unit of volatility. If you would invest  3,864  in YETI Holdings on December 28, 2024 and sell it today you would lose (469.00) from holding YETI Holdings or give up 12.14% of portfolio value over 90 days.

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

American Outdoor Brands  vs.  YETI Holdings

American Outdoor Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Outdoor Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

YETI Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days YETI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with American Outdoor and YETI Holdings

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

The idea behind American Outdoor Brands and YETI Holdings 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.