Correlation Between YETI Holdings and Callaway Golf

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

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

Diversification Opportunities for YETI Holdings and Callaway Golf

0.73

Correlation Coefficient

YETI Holdings  Callaway Golf

Poor diversification

The 3 months correlation between YETI and Callaway is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding YETI Holdings and Callaway Golf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Callaway Golf 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 Callaway Golf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Callaway Golf has no effect on the direction of YETI Holdings i.e., YETI Holdings and Callaway Golf go up and down completely randomly.

Pair Corralation between YETI Holdings and Callaway Golf

Given the investment horizon of 90 days YETI Holdings is expected to under-perform the Callaway Golf. But the stock apears to be less risky and, when comparing its historical volatility, YETI Holdings is 1.81 times less risky than Callaway Golf. The stock trades about -0.1 of its potential returns per unit of risk. The Callaway Golf is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  767.00  in Callaway Golf on December 29, 2024 and sell it today you would lose (77.00) from holding Callaway Golf or give up 10.04% 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.  Callaway Golf

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.

Callaway Golf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Callaway Golf has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with YETI Holdings and Callaway Golf

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

The idea behind YETI Holdings and Callaway Golf 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.