Correlation Between Jack In and Yum Brands

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

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

Diversification Opportunities for Jack In and Yum Brands

0.05

Correlation Coefficient

Jack In  Yum Brands

Significant diversification

The 3 months correlation between Jack and Yum is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Jack In The and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and Jack In 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 Jack In The 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 Jack In i.e., Jack In and Yum Brands go up and down completely randomly.

Pair Corralation between Jack In and Yum Brands

Given the investment horizon of 90 days Jack In The is expected to under-perform the Yum Brands. In addition to that, Jack In is 1.54 times more volatile than Yum Brands. It trades about -0.22 of its total potential returns per unit of risk. Yum Brands is currently generating about 0.12 per unit of volatility. If you would invest  13,762  in Yum Brands on November 28, 2024 and sell it today you would earn a total of  1,653  from holding Yum Brands or generate 12.01% return on investment over 90 days.

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

Jack In The  vs.  Yum Brands

Jack In

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jack In The has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Yum Brands

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yum Brands are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Yum Brands displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jack In and Yum Brands

The main advantage of trading using opposite Jack In and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jack In 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 Jack In The 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.