Correlation Between Superior Plus and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Yum Brands, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Yum Brands.
Diversification Opportunities for Superior Plus and Yum Brands
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Superior and Yum is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and Superior Plus 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 Superior Plus 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 Superior Plus i.e., Superior Plus and Yum Brands go up and down completely randomly.
Pair Corralation between Superior Plus and Yum Brands
Assuming the 90 days horizon Superior Plus is expected to generate 8.81 times less return on investment than Yum Brands. In addition to that, Superior Plus is 3.58 times more volatile than Yum Brands. It trades about 0.01 of its total potential returns per unit of risk. Yum Brands is currently generating about 0.22 per unit of volatility. If you would invest 12,365 in Yum Brands on August 31, 2024 and sell it today you would earn a total of 805.00 from holding Yum Brands or generate 6.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Yum Brands
Performance |
| Timeline |
| Superior Plus Corp |
| Yum Brands |
Superior Plus and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Yum Brands
The main advantage of trading using opposite Superior Plus and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. BROADSTNET LEADL 00025 | Superior Plus vs. Mitsubishi Materials | Superior Plus vs. Martin Marietta Materials | Superior Plus vs. Summit Materials |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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