Correlation Between Big Buck and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Big Buck and Yum Brands 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 Big Buck and Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Buck Brewery and Yum Brands, you can compare the effects of market volatilities on Big Buck and Yum Brands 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 Big Buck with a short position of Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Buck and Yum Brands.
Diversification Opportunities for Big Buck and Yum Brands
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Big and Yum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Big Buck Brewery and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and Big Buck 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 Big Buck Brewery are associated (or correlated) with Yum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum Brands has no effect on the direction of Big Buck i.e., Big Buck and Yum Brands go up and down completely randomly.
Pair Corralation between Big Buck and Yum Brands
Assuming the 90 days horizon Big Buck Brewery is expected to under-perform the Yum Brands. In addition to that, Big Buck is 5.62 times more volatile than Yum Brands. It trades about -0.07 of its total potential returns per unit of risk. Yum Brands is currently generating about 0.04 per unit of volatility. If you would invest 10,881 in Yum Brands on February 6, 2024 and sell it today you would earn a total of 2,553 from holding Yum Brands or generate 23.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 37.37% |
Values | Daily Returns |
Big Buck Brewery vs. Yum Brands
Performance |
Timeline |
Big Buck Brewery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Yum Brands |
Big Buck and Yum Brands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Big Buck and Yum Brands
The main advantage of trading using opposite Big Buck and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Buck position performs unexpectedly, Yum Brands 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 Yum Brands will offset losses from the drop in Yum Brands' long position.Big Buck vs. Q2 Holdings | Big Buck vs. Electronic Arts | Big Buck vs. Blue Hat Interactive | Big Buck vs. NanoTech Gaming |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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