Correlation Between Cannae Holdings and Yum Brands

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

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

Diversification Opportunities for Cannae Holdings and Yum Brands

-0.48

Correlation Coefficient

Cannae Holdings  Yum Brands

Very good diversification

The 3 months correlation between Cannae and Yum is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and Cannae Holdings 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 Cannae Holdings are associated (or correlated) with Yum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum Brands has no effect on the direction of Cannae Holdings i.e., Cannae Holdings and Yum Brands go up and down completely randomly.

Pair Corralation between Cannae Holdings and Yum Brands

Given the investment horizon of 90 days Cannae Holdings is expected to under-perform the Yum Brands. In addition to that, Cannae Holdings is 1.17 times more volatile than Yum Brands. It trades about -0.02 of its total potential returns per unit of risk. Yum Brands is currently generating about 0.16 per unit of volatility. If you would invest  13,459  in Yum Brands on December 27, 2024 and sell it today you would earn a total of  2,409  from holding Yum Brands or generate 17.9% return on investment over 90 days.

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

Cannae Holdings  vs.  Yum Brands

Cannae Holdings

Risk-Adjusted Performance

Very Weak

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

Yum Brands

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yum Brands are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Yum Brands displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cannae Holdings and Yum Brands

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

The idea behind Cannae Holdings and Yum Brands 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.