Correlation Between Yelp and Tupperware Brands

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

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

Diversification Opportunities for Yelp and Tupperware Brands

-0.49

Correlation Coefficient

Yelp  Tupperware Brands

Very good diversification

The 3 months correlation between Yelp and Tupperware is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Yelp Inc and Tupperware Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tupperware Brands and Yelp 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 Yelp Inc are associated (or correlated) with Tupperware Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tupperware Brands has no effect on the direction of Yelp i.e., Yelp and Tupperware Brands go up and down completely randomly.

Pair Corralation between Yelp and Tupperware Brands

If you would invest  3,749  in Yelp Inc on September 25, 2024 and sell it today you would earn a total of  104.00  from holding Yelp Inc or generate 2.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Yelp Inc  vs.  Tupperware Brands

Yelp Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yelp Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Yelp reported solid returns over the last few months and may actually be approaching a breakup point.

Tupperware Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tupperware Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tupperware Brands is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Yelp and Tupperware Brands

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

The idea behind Yelp Inc and Tupperware Brands 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.