Correlation Between Yerbae Brands and Sun Peak

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

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

Diversification Opportunities for Yerbae Brands and Sun Peak

0.44

Correlation Coefficient

Yerbae Brands  Sun Peak

Very weak diversification

The 3 months correlation between Yerbae and Sun is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Yerbae Brands Corp and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals and Yerbae Brands 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 Yerbae Brands Corp are associated (or correlated) with Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Yerbae Brands i.e., Yerbae Brands and Sun Peak go up and down completely randomly.

Pair Corralation between Yerbae Brands and Sun Peak

Assuming the 90 days trading horizon Yerbae Brands Corp is expected to generate 2.76 times more return on investment than Sun Peak. However, Yerbae Brands is 2.76 times more volatile than Sun Peak Metals. It trades about 0.05 of its potential returns per unit of risk. Sun Peak Metals is currently generating about 0.04 per unit of risk. If you would invest  12.00  in Yerbae Brands Corp on December 22, 2024 and sell it today you would lose (2.00) from holding Yerbae Brands Corp or give up 16.67% of portfolio value over 90 days.

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

Yerbae Brands Corp  vs.  Sun Peak Metals

Yerbae Brands Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yerbae Brands Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Yerbae Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Sun Peak Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Peak Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Sun Peak may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Yerbae Brands and Sun Peak

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

The idea behind Yerbae Brands Corp and Sun Peak Metals 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.