Correlation Between Yum Brands and Starbucks
Can any of the company-specific risk be diversified away by investing in both Yum Brands and Starbucks 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 Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and Starbucks, you can compare the effects of market volatilities on Yum Brands and Starbucks 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 Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Starbucks.
Diversification Opportunities for Yum Brands and Starbucks
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yum and Starbucks is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Yum Brands i.e., Yum Brands and Starbucks go up and down completely randomly.
Pair Corralation between Yum Brands and Starbucks
Considering the 90-day investment horizon Yum Brands is expected to generate 0.97 times more return on investment than Starbucks. However, Yum Brands is 1.03 times less risky than Starbucks. It trades about 0.06 of its potential returns per unit of risk. Starbucks is currently generating about -0.28 per unit of risk. If you would invest 13,651 in Yum Brands on January 20, 2024 and sell it today you would earn a total of 136.00 from holding Yum Brands or generate 1.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Yum Brands vs. Starbucks
Performance |
Timeline |
Yum Brands |
Starbucks |
Yum Brands and Starbucks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Yum Brands and Starbucks
The main advantage of trading using opposite Yum Brands and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.Yum Brands vs. Shake Shack | Yum Brands vs. Papa Johns International | Yum Brands vs. Dominos Pizza | Yum Brands vs. Jack In The |
Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data |