Correlation Between Clarus Corp and YETI Holdings

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

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

Diversification Opportunities for Clarus Corp and YETI Holdings

0.23

Correlation Coefficient

Clarus Corp  YETI Holdings

Modest diversification

The 3 months correlation between Clarus and YETI is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Clarus Corp and YETI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YETI Holdings and Clarus Corp 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 Clarus Corp 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 Clarus Corp i.e., Clarus Corp and YETI Holdings go up and down completely randomly.

Pair Corralation between Clarus Corp and YETI Holdings

Given the investment horizon of 90 days Clarus Corp is expected to generate 1.55 times more return on investment than YETI Holdings. However, Clarus Corp is 1.55 times more volatile than YETI Holdings. It trades about 0.04 of its potential returns per unit of risk. YETI Holdings is currently generating about -0.06 per unit of risk. If you would invest  454.00  in Clarus Corp on November 28, 2024 and sell it today you would earn a total of  19.00  from holding Clarus Corp or generate 4.19% return on investment over 90 days.

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

Clarus Corp  vs.  YETI Holdings

Clarus Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clarus Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Clarus Corp may actually be approaching a critical reversion point that can send shares even higher in March 2025.

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 Clarus Corp and YETI Holdings

The main advantage of trading using opposite Clarus Corp and YETI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clarus Corp 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 Clarus Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.