Correlation Between Shimano and YETI Holdings

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

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

Diversification Opportunities for Shimano and YETI Holdings

-0.09

Correlation Coefficient

Shimano  YETI Holdings

Good diversification

The 3 months correlation between Shimano and YETI is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Shimano and YETI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YETI Holdings and Shimano 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 Shimano 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 Shimano i.e., Shimano and YETI Holdings go up and down completely randomly.

Pair Corralation between Shimano and YETI Holdings

Assuming the 90 days horizon Shimano is expected to generate 0.93 times more return on investment than YETI Holdings. However, Shimano is 1.07 times less risky than YETI Holdings. It trades about 0.0 of its potential returns per unit of risk. YETI Holdings is currently generating about -0.01 per unit of risk. If you would invest  14,803  in Shimano on September 13, 2024 and sell it today you would lose (1,076) from holding Shimano or give up 7.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Shimano  vs.  YETI Holdings

Shimano

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shimano has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

YETI Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YETI Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, YETI Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shimano and YETI Holdings

The main advantage of trading using opposite Shimano and YETI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shimano 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 Shimano 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.