Correlation Between Yum Brands and NBCUNIVERSAL

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

By analyzing existing cross correlation between Yum Brands and NBCUNIVERSAL MEDIA LLC, you can compare the effects of market volatilities on Yum Brands and NBCUNIVERSAL 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 NBCUNIVERSAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and NBCUNIVERSAL.

Diversification Opportunities for Yum Brands and NBCUNIVERSAL

-0.21

Correlation Coefficient

Yum Brands  NBCUNIVERSAL

Very good diversification

The 3 months correlation between Yum and NBCUNIVERSAL is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and NBCUNIVERSAL MEDIA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCUNIVERSAL MEDIA LLC has no effect on the direction of Yum Brands i.e., Yum Brands and NBCUNIVERSAL go up and down completely randomly.

Pair Corralation between Yum Brands and NBCUNIVERSAL

Considering the 90-day investment horizon Yum Brands is expected to generate 583.67 times less return on investment than NBCUNIVERSAL. But when comparing it to its historical volatility, Yum Brands is 102.27 times less risky than NBCUNIVERSAL. It trades about 0.02 of its potential returns per unit of risk. NBCUNIVERSAL MEDIA LLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10,792  in NBCUNIVERSAL MEDIA LLC on September 20, 2024 and sell it today you would lose (365.00) from holding NBCUNIVERSAL MEDIA LLC or give up 3.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.7%
Values	Daily Returns

Yum Brands  vs.  NBCUNIVERSAL MEDIA LLC

Yum Brands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yum Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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 NBCUNIVERSAL MEDIA LLC investors.

Pair Trading with Yum Brands and NBCUNIVERSAL

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

The idea behind Yum Brands and NBCUNIVERSAL MEDIA LLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.