Correlation Between YETI Holdings and Shimano

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

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

Diversification Opportunities for YETI Holdings and Shimano

-0.51

Correlation Coefficient

YETI Holdings  Shimano

Excellent diversification

The 3 months correlation between YETI and Shimano is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding YETI Holdings and Shimano Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimano Inc ADR 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 Shimano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimano Inc ADR has no effect on the direction of YETI Holdings i.e., YETI Holdings and Shimano go up and down completely randomly.

Pair Corralation between YETI Holdings and Shimano

Given the investment horizon of 90 days YETI Holdings is expected to under-perform the Shimano. In addition to that, YETI Holdings is 1.14 times more volatile than Shimano Inc ADR. It trades about -0.1 of its total potential returns per unit of risk. Shimano Inc ADR is currently generating about 0.1 per unit of volatility. If you would invest  1,342  in Shimano Inc ADR on December 22, 2024 and sell it today you would earn a total of  135.00  from holding Shimano Inc ADR or generate 10.06% return on investment over 90 days.

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

YETI Holdings  vs.  Shimano Inc ADR

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.

Shimano Inc ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shimano Inc ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Shimano may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with YETI Holdings and Shimano

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

The idea behind YETI Holdings and Shimano Inc ADR 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.