Correlation Between Under Armour and YETI Holdings

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

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

Diversification Opportunities for Under Armour and YETI Holdings

0.27

Correlation Coefficient

Under Armour  YETI Holdings

Modest diversification

The 3 months correlation between Under and YETI is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and YETI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YETI Holdings and Under Armour 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 Under Armour C 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 Under Armour i.e., Under Armour and YETI Holdings go up and down completely randomly.

Pair Corralation between Under Armour and YETI Holdings

Allowing for the 90-day total investment horizon Under Armour C is expected to under-perform the YETI Holdings. In addition to that, Under Armour is 1.43 times more volatile than YETI Holdings. It trades about -0.22 of its total potential returns per unit of risk. YETI Holdings is currently generating about -0.06 per unit of volatility. If you would invest  4,052  in YETI Holdings on September 24, 2024 and sell it today you would lose (111.00) from holding YETI Holdings or give up 2.74% of portfolio value over 90 days.

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

Under Armour C  vs.  YETI Holdings

Under Armour C

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour C are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Under Armour is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

YETI Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YETI Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, YETI Holdings is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Under Armour and YETI Holdings

The main advantage of trading using opposite Under Armour and YETI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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 Under Armour C 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.