Correlation Between Yum Brands and National American
Can any of the company-specific risk be diversified away by investing in both Yum Brands and National American 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 National American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and National American University, you can compare the effects of market volatilities on Yum Brands and National American 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 National American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and National American.
Diversification Opportunities for Yum Brands and National American
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Yum and National is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and National American University in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National American 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 National American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National American has no effect on the direction of Yum Brands i.e., Yum Brands and National American go up and down completely randomly.
Pair Corralation between Yum Brands and National American
If you would invest 14,025 in Yum Brands on January 25, 2024 and sell it today you would lose (15.00) from holding Yum Brands or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Yum Brands vs. National American University
Performance |
| Timeline |
| Yum Brands |
| National American |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Yum Brands and National American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and National American
The main advantage of trading using opposite Yum Brands and National American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, National American 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 National American will offset losses from the drop in National American's long position.| Yum Brands vs. Shake Shack | Yum Brands vs. Papa Johns International | Yum Brands vs. Dominos Pizza | Yum Brands vs. Jack In The |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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