Correlation Between BANDAI NAMCO and YETI Holdings

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

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

Diversification Opportunities for BANDAI NAMCO and YETI Holdings

-0.8

Correlation Coefficient

BANDAI NAMCO  YETI Holdings

Pay attention - limited upside

The 3 months correlation between BANDAI and YETI is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding BANDAI NAMCO Holdings and YETI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YETI Holdings and BANDAI NAMCO 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 BANDAI NAMCO Holdings 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 BANDAI NAMCO i.e., BANDAI NAMCO and YETI Holdings go up and down completely randomly.

Pair Corralation between BANDAI NAMCO and YETI Holdings

Assuming the 90 days horizon BANDAI NAMCO Holdings is expected to generate 2.11 times more return on investment than YETI Holdings. However, BANDAI NAMCO is 2.11 times more volatile than YETI Holdings. It trades about 0.23 of its potential returns per unit of risk. YETI Holdings is currently generating about -0.11 per unit of risk. If you would invest  2,120  in BANDAI NAMCO Holdings on December 27, 2024 and sell it today you would earn a total of  1,495  from holding BANDAI NAMCO Holdings or generate 70.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

BANDAI NAMCO Holdings  vs.  YETI Holdings

BANDAI NAMCO Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BANDAI NAMCO Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, BANDAI NAMCO reported solid returns over the last few months and may actually be approaching a breakup point.

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 fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with BANDAI NAMCO and YETI Holdings

The main advantage of trading using opposite BANDAI NAMCO and YETI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANDAI NAMCO 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 BANDAI NAMCO Holdings 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.