Correlation Between SoftBank Group and Yum Brands
Can any of the company-specific risk be diversified away by investing in both SoftBank Group 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 SoftBank Group and Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Group Corp and Yum Brands, you can compare the effects of market volatilities on SoftBank Group 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 SoftBank Group with a short position of Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Yum Brands.
Diversification Opportunities for SoftBank Group and Yum Brands
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SoftBank and Yum is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and SoftBank Group 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 SoftBank Group Corp 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 SoftBank Group i.e., SoftBank Group and Yum Brands go up and down completely randomly.
Pair Corralation between SoftBank Group and Yum Brands
Assuming the 90 days trading horizon SoftBank Group Corp is expected to under-perform the Yum Brands. In addition to that, SoftBank Group is 1.4 times more volatile than Yum Brands. It trades about -0.19 of its total potential returns per unit of risk. Yum Brands is currently generating about 0.08 per unit of volatility. If you would invest 13,479 in Yum Brands on August 29, 2024 and sell it today you would earn a total of 339.00 from holding Yum Brands or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 78.26% |
| Values | Daily Returns |
SoftBank Group Corp vs. Yum Brands
Performance |
| Timeline |
| SoftBank Group Corp |
| Yum Brands |
SoftBank Group and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and Yum Brands
The main advantage of trading using opposite SoftBank Group and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group 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.| SoftBank Group vs. Toyota Motor Corp | SoftBank Group vs. OTP Bank Nyrt | SoftBank Group vs. Cognizant Technology Solutions | SoftBank Group vs. Lendinvest PLC |
| Yum Brands vs. Lendinvest PLC | Yum Brands vs. Neometals | Yum Brands vs. Coor Service Management | Yum Brands vs. Albion Technology General |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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