Correlation Between LYFT and YETI Holdings

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

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

Diversification Opportunities for LYFT and YETI Holdings

0.47

Correlation Coefficient

LYFT  YETI Holdings

Very weak diversification

The 3 months correlation between LYFT and YETI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding LYFT Inc and YETI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YETI Holdings and LYFT 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 LYFT Inc 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 LYFT i.e., LYFT and YETI Holdings go up and down completely randomly.

Pair Corralation between LYFT and YETI Holdings

Given the investment horizon of 90 days LYFT Inc is expected to under-perform the YETI Holdings. In addition to that, LYFT is 1.71 times more volatile than YETI Holdings. It trades about -0.1 of its total potential returns per unit of risk. YETI Holdings is currently generating about -0.07 per unit of volatility. If you would invest  3,883  in YETI Holdings on November 28, 2024 and sell it today you would lose (131.00) from holding YETI Holdings or give up 3.37% of portfolio value over 90 days.

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

LYFT Inc  vs.  YETI Holdings

LYFT Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days LYFT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in March 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 LYFT and YETI Holdings

The main advantage of trading using opposite LYFT and YETI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LYFT 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 LYFT Inc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.