Correlation Between YUMY and Global X

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

By analyzing existing cross correlation between YUMY and Global X Renewable, you can compare the effects of market volatilities on YUMY and Global X 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 YUMY with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of YUMY and Global X.

Diversification Opportunities for YUMY and Global X

0.43

Correlation Coefficient

YUMY  Global X

Very weak diversification

The 3 months correlation between YUMY and Global is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding YUMY and Global X Renewable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Renewable and YUMY 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 YUMY are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Renewable has no effect on the direction of YUMY i.e., YUMY and Global X go up and down completely randomly.

Pair Corralation between YUMY and Global X

Given the investment horizon of 90 days YUMY is expected to generate 0.81 times more return on investment than Global X. However, YUMY is 1.23 times less risky than Global X. It trades about 0.0 of its potential returns per unit of risk. Global X Renewable is currently generating about -0.05 per unit of risk. If you would invest  1,803  in YUMY on September 13, 2024 and sell it today you would lose (25.00) from holding YUMY or give up 1.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	29.35%
Values	Daily Returns

YUMY  vs.  Global X Renewable

YUMY

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global X Renewable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Renewable has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Pair Trading with YUMY and Global X

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

The idea behind YUMY and Global X Renewable 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.