Correlation Between Yum Brands and Autogrill SpA

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

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

Diversification Opportunities for Yum Brands and Autogrill SpA

-0.52

Correlation Coefficient

Yum Brands  Autogrill SpA

Excellent diversification

The 3 months correlation between Yum and Autogrill is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Autogrill SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autogrill SpA 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 Autogrill SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autogrill SpA has no effect on the direction of Yum Brands i.e., Yum Brands and Autogrill SpA go up and down completely randomly.

Pair Corralation between Yum Brands and Autogrill SpA

If you would invest  13,522  in Yum Brands on February 7, 2024 and sell it today you would earn a total of  163.00  from holding Yum Brands or generate 1.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Yum Brands  vs.  Autogrill SpA

Yum Brands

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yum Brands are ranked lower than 7 (%) 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.

Autogrill SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autogrill SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Autogrill SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Yum Brands and Autogrill SpA

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

The idea behind Yum Brands and Autogrill SpA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.