Correlation Between YETI Holdings and Clarus Corp

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

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

Diversification Opportunities for YETI Holdings and Clarus Corp

0.44

Correlation Coefficient

YETI Holdings  Clarus Corp

Very weak diversification

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

Pair Corralation between YETI Holdings and Clarus Corp

Given the investment horizon of 90 days YETI Holdings is expected to generate 5.84 times less return on investment than Clarus Corp. But when comparing it to its historical volatility, YETI Holdings is 1.13 times less risky than Clarus Corp. It trades about 0.01 of its potential returns per unit of risk. Clarus Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  429.00  in Clarus Corp on August 30, 2024 and sell it today you would earn a total of  33.00  from holding Clarus Corp or generate 7.69% return on investment over 90 days.

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

YETI Holdings  vs.  Clarus Corp

YETI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YETI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, YETI Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Clarus Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clarus Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Clarus Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with YETI Holdings and Clarus Corp

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

The idea behind YETI Holdings and Clarus Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.