Correlation Between Yum Brands and OTP Bank
Can any of the company-specific risk be diversified away by investing in both Yum Brands and OTP Bank 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 OTP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and OTP Bank Nyrt, you can compare the effects of market volatilities on Yum Brands and OTP Bank 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 OTP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and OTP Bank.
Diversification Opportunities for Yum Brands and OTP Bank
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yum and OTP is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and OTP Bank Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OTP Bank Nyrt 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 OTP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OTP Bank Nyrt has no effect on the direction of Yum Brands i.e., Yum Brands and OTP Bank go up and down completely randomly.
Pair Corralation between Yum Brands and OTP Bank
Assuming the 90 days trading horizon Yum Brands is expected to generate 31.52 times less return on investment than OTP Bank. But when comparing it to its historical volatility, Yum Brands is 11.08 times less risky than OTP Bank. It trades about 0.02 of its potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,259,000 in OTP Bank Nyrt on August 25, 2024 and sell it today you would earn a total of 0.00 from holding OTP Bank Nyrt or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yum Brands vs. OTP Bank Nyrt
Performance |
| Timeline |
| Yum Brands |
| OTP Bank Nyrt |
Yum Brands and OTP Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and OTP Bank
The main advantage of trading using opposite Yum Brands and OTP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, OTP Bank 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 OTP Bank will offset losses from the drop in OTP Bank's long position.| Yum Brands vs. Vitec Software Group | Yum Brands vs. Ryanair Holdings plc | Yum Brands vs. Fresenius Medical Care | Yum Brands vs. Check Point Software |
| OTP Bank vs. Kinnevik Investment AB | OTP Bank vs. Smithson Investment Trust | OTP Bank vs. Park Hotels Resorts | OTP Bank vs. The Investment |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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