Correlation Between Vitec Software and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Vitec Software 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 Vitec Software and Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vitec Software Group and Yum Brands, you can compare the effects of market volatilities on Vitec Software 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 Vitec Software with a short position of Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitec Software and Yum Brands.
Diversification Opportunities for Vitec Software and Yum Brands
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vitec and Yum is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and Vitec Software 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 Vitec Software Group 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 Vitec Software i.e., Vitec Software and Yum Brands go up and down completely randomly.
Pair Corralation between Vitec Software and Yum Brands
Assuming the 90 days trading horizon Vitec Software Group is expected to under-perform the Yum Brands. In addition to that, Vitec Software is 1.42 times more volatile than Yum Brands. It trades about -0.02 of its total potential returns per unit of risk. Yum Brands is currently generating about 0.04 per unit of volatility. 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 |
Vitec Software Group vs. Yum Brands
Performance |
| Timeline |
| Vitec Software Group |
| Yum Brands |
Vitec Software and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vitec Software and Yum Brands
The main advantage of trading using opposite Vitec Software and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vitec Software 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.| Vitec Software vs. Samsung Electronics Co | Vitec Software vs. Samsung Electronics Co | Vitec Software vs. Hyundai Motor | Vitec Software vs. Toyota Motor Corp |
| Yum Brands vs. Vitec Software Group | Yum Brands vs. Ryanair Holdings plc | Yum Brands vs. Fresenius Medical Care | Yum Brands vs. Check Point Software |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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