Correlation Between Yum Brands and Vitec Software
Can any of the company-specific risk be diversified away by investing in both Yum Brands and Vitec Software 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 Vitec Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and Vitec Software Group, you can compare the effects of market volatilities on Yum Brands and Vitec Software 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 Vitec Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Vitec Software.
Diversification Opportunities for Yum Brands and Vitec Software
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yum and Vitec is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Vitec Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitec Software Group 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 Vitec Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitec Software Group has no effect on the direction of Yum Brands i.e., Yum Brands and Vitec Software go up and down completely randomly.
Pair Corralation between Yum Brands and Vitec Software
Assuming the 90 days trading horizon Yum Brands is expected to generate 0.7 times more return on investment than Vitec Software. However, Yum Brands is 1.42 times less risky than Vitec Software. It trades about 0.04 of its potential returns per unit of risk. Vitec Software Group is currently generating about -0.02 per unit of risk. If you would invest 13,338 in Yum Brands on August 26, 2024 and sell it today you would earn a total of 158.00 from holding Yum Brands or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yum Brands vs. Vitec Software Group
Performance |
| Timeline |
| Yum Brands |
| Vitec Software Group |
Yum Brands and Vitec Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and Vitec Software
The main advantage of trading using opposite Yum Brands and Vitec Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, Vitec Software 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 Vitec Software will offset losses from the drop in Vitec Software's long position.| Yum Brands vs. Ameriprise Financial | Yum Brands vs. Playtech Plc | Yum Brands vs. Komercni Banka | Yum Brands vs. Molson Coors Beverage |
| Vitec Software vs. Samsung Electronics Co | Vitec Software vs. Samsung Electronics Co | Vitec Software vs. Hyundai Motor | Vitec Software vs. Toyota Motor Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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