Correlation Between Yum Brands and 020002AJ0

Can any of the company-specific risk be diversified away by investing in both Yum Brands and 020002AJ0 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 Yum Brands and 020002AJ0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yum Brands and ALL 69 15 MAY 38, you can compare the effects of market volatilities on Yum Brands and 020002AJ0 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 Yum Brands with a short position of 020002AJ0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and 020002AJ0.

Diversification Opportunities for Yum Brands and 020002AJ0

-0.34

Correlation Coefficient

Yum Brands  020002AJ0

Very good diversification

The 3 months correlation between Yum and 020002AJ0 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and ALL 69 15 MAY 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALL 69 15 and Yum Brands 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 Yum Brands are associated (or correlated) with 020002AJ0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALL 69 15 has no effect on the direction of Yum Brands i.e., Yum Brands and 020002AJ0 go up and down completely randomly.

Pair Corralation between Yum Brands and 020002AJ0

Considering the 90-day investment horizon Yum Brands is expected to generate 0.41 times more return on investment than 020002AJ0. However, Yum Brands is 2.44 times less risky than 020002AJ0. It trades about 0.04 of its potential returns per unit of risk. ALL 69 15 MAY 38 is currently generating about 0.0 per unit of risk. If you would invest  12,387  in Yum Brands on October 2, 2024 and sell it today you would earn a total of  1,029  from holding Yum Brands or generate 8.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	40.17%
Values	Daily Returns

Yum Brands  vs.  ALL 69 15 MAY 38

Yum Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yum Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Yum Brands is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

ALL 69 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALL 69 15 MAY 38 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ALL 69 15 MAY 38 investors.

Pair Trading with Yum Brands and 020002AJ0

The main advantage of trading using opposite Yum Brands and 020002AJ0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, 020002AJ0 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 020002AJ0 will offset losses from the drop in 020002AJ0's long position.

The idea behind Yum Brands and ALL 69 15 MAY 38 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.