Correlation Between Premium Income and Yerbae Brands

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

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

Diversification Opportunities for Premium Income and Yerbae Brands

0.23

Correlation Coefficient

Premium Income  Yerbae Brands

Modest diversification

The 3 months correlation between Premium and Yerbae is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Premium Income and Yerbae Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yerbae Brands Corp and Premium Income 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 Premium Income are associated (or correlated) with Yerbae Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yerbae Brands Corp has no effect on the direction of Premium Income i.e., Premium Income and Yerbae Brands go up and down completely randomly.

Pair Corralation between Premium Income and Yerbae Brands

Assuming the 90 days trading horizon Premium Income is expected to under-perform the Yerbae Brands. But the stock apears to be less risky and, when comparing its historical volatility, Premium Income is 16.59 times less risky than Yerbae Brands. The stock trades about -0.21 of its potential returns per unit of risk. The Yerbae Brands Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Yerbae Brands Corp on October 10, 2024 and sell it today you would earn a total of  5.00  from holding Yerbae Brands Corp or generate 41.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Premium Income  vs.  Yerbae Brands Corp

Premium Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premium Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Yerbae Brands Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yerbae Brands Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Yerbae Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Premium Income and Yerbae Brands

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

The idea behind Premium Income and Yerbae Brands Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.