Correlation Between YETI Holdings and BANDAI NAMCO

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

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

Diversification Opportunities for YETI Holdings and BANDAI NAMCO

0.3

Correlation Coefficient

YETI Holdings  BANDAI NAMCO

Weak diversification

The 3 months correlation between YETI and BANDAI is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding YETI Holdings and BANDAI NAMCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANDAI NAMCO Holdings 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 BANDAI NAMCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANDAI NAMCO Holdings has no effect on the direction of YETI Holdings i.e., YETI Holdings and BANDAI NAMCO go up and down completely randomly.

Pair Corralation between YETI Holdings and BANDAI NAMCO

Given the investment horizon of 90 days YETI Holdings is expected to generate 1.1 times more return on investment than BANDAI NAMCO. However, YETI Holdings is 1.1 times more volatile than BANDAI NAMCO Holdings. It trades about 0.11 of its potential returns per unit of risk. BANDAI NAMCO Holdings is currently generating about -0.03 per unit of risk. If you would invest  3,906  in YETI Holdings on September 13, 2024 and sell it today you would earn a total of  574.00  from holding YETI Holdings or generate 14.7% return on investment over 90 days.

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

YETI Holdings  vs.  BANDAI NAMCO Holdings

YETI Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YETI Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, YETI Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

BANDAI NAMCO Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANDAI NAMCO Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, BANDAI NAMCO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with YETI Holdings and BANDAI NAMCO

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

The idea behind YETI Holdings and BANDAI NAMCO Holdings 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..