Correlation Between YETI Holdings and American Outdoor

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

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

Diversification Opportunities for YETI Holdings and American Outdoor

0.65

Correlation Coefficient

YETI Holdings  American Outdoor

Poor diversification

The 3 months correlation between YETI and American is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding YETI Holdings and American Outdoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Outdoor Brands and YETI Holdings 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 YETI Holdings are associated (or correlated) with American Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Outdoor Brands has no effect on the direction of YETI Holdings i.e., YETI Holdings and American Outdoor go up and down completely randomly.

Pair Corralation between YETI Holdings and American Outdoor

Given the investment horizon of 90 days YETI Holdings is expected to generate 0.56 times more return on investment than American Outdoor. However, YETI Holdings is 1.79 times less risky than American Outdoor. It trades about -0.1 of its potential returns per unit of risk. American Outdoor Brands is currently generating about -0.06 per unit of risk. If you would invest  3,864  in YETI Holdings on December 28, 2024 and sell it today you would lose (469.00) from holding YETI Holdings or give up 12.14% of portfolio value over 90 days.

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

YETI Holdings  vs.  American Outdoor Brands

YETI Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days YETI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

American Outdoor Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Outdoor Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with YETI Holdings and American Outdoor

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

The idea behind YETI Holdings and American Outdoor 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.