Correlation Between Ametek and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Ametek 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 Ametek and Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ametek Inc and Yum Brands, you can compare the effects of market volatilities on Ametek 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 Ametek with a short position of Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ametek and Yum Brands.
Diversification Opportunities for Ametek and Yum Brands
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ametek and Yum is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and Ametek 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 Ametek Inc 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 Ametek i.e., Ametek and Yum Brands go up and down completely randomly.
Pair Corralation between Ametek and Yum Brands
Assuming the 90 days trading horizon Ametek Inc is expected to under-perform the Yum Brands. But the stock apears to be less risky and, when comparing its historical volatility, Ametek Inc is 1.15 times less risky than Yum Brands. The stock trades about -0.43 of its potential returns per unit of risk. The Yum Brands is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 13,440 in Yum Brands on September 23, 2024 and sell it today you would lose (285.00) from holding Yum Brands or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ametek Inc vs. Yum Brands
Performance |
| Timeline |
| Ametek Inc |
| Yum Brands |
Ametek and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ametek and Yum Brands
The main advantage of trading using opposite Ametek and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ametek 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.| Ametek vs. Samsung Electronics Co | Ametek vs. Samsung Electronics Co | Ametek vs. Hyundai Motor | Ametek vs. Reliance Industries Ltd |
| Yum Brands vs. Uniper SE | Yum Brands vs. Mulberry Group PLC | Yum Brands vs. London Security Plc | Yum Brands vs. Triad Group PLC |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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