Correlation Between Yum Brands and Las Vegas
Can any of the company-specific risk be diversified away by investing in both Yum Brands and Las Vegas 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 Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and Las Vegas Sands, you can compare the effects of market volatilities on Yum Brands and Las Vegas 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 Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Las Vegas.
Diversification Opportunities for Yum Brands and Las Vegas
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yum and Las is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Yum Brands i.e., Yum Brands and Las Vegas go up and down completely randomly.
Pair Corralation between Yum Brands and Las Vegas
Assuming the 90 days trading horizon Yum Brands is expected to generate 2.28 times more return on investment than Las Vegas. However, Yum Brands is 2.28 times more volatile than Las Vegas Sands. It trades about 0.02 of its potential returns per unit of risk. Las Vegas Sands is currently generating about 0.01 per unit of risk. If you would invest 12,547 in Yum Brands on August 31, 2024 and sell it today you would earn a total of 1,380 from holding Yum Brands or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.95% |
| Values | Daily Returns |
Yum Brands vs. Las Vegas Sands
Performance |
| Timeline |
| Yum Brands |
| Las Vegas Sands |
Yum Brands and Las Vegas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and Las Vegas
The main advantage of trading using opposite Yum Brands and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' long position.| Yum Brands vs. Zegona Communications Plc | Yum Brands vs. United Internet AG | Yum Brands vs. Zoom Video Communications | Yum Brands vs. Spirent Communications plc |
| Las Vegas vs. Erste Group Bank | Las Vegas vs. British American Tobacco | Las Vegas vs. X FAB Silicon Foundries | Las Vegas vs. Sparebank 1 SR |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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