Correlation Between YETI Holdings and Johnson Outdoors

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

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

Diversification Opportunities for YETI Holdings and Johnson Outdoors

0.65

Correlation Coefficient

YETI Holdings  Johnson Outdoors

Poor diversification

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

Pair Corralation between YETI Holdings and Johnson Outdoors

Given the investment horizon of 90 days YETI Holdings is expected to generate 0.72 times more return on investment than Johnson Outdoors. However, YETI Holdings is 1.39 times less risky than Johnson Outdoors. It trades about -0.06 of its potential returns per unit of risk. Johnson Outdoors is currently generating about -0.1 per unit of risk. If you would invest  4,037  in YETI Holdings on November 28, 2024 and sell it today you would lose (285.00) from holding YETI Holdings or give up 7.06% 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.  Johnson Outdoors

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.

Johnson Outdoors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Johnson Outdoors 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 March 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 Johnson Outdoors

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

The idea behind YETI Holdings and Johnson Outdoors 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 Global Correlations module to find global opportunities by holding instruments from different markets.