Correlation Between CAVA Group, and Yum China
Can any of the company-specific risk be diversified away by investing in both CAVA Group, and Yum China 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 CAVA Group, and Yum China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAVA Group, and Yum China Holdings, you can compare the effects of market volatilities on CAVA Group, and Yum China 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 CAVA Group, with a short position of Yum China. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAVA Group, and Yum China.
Diversification Opportunities for CAVA Group, and Yum China
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CAVA and Yum is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, and Yum China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum China Holdings and CAVA 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 CAVA Group, are associated (or correlated) with Yum China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum China Holdings has no effect on the direction of CAVA Group, i.e., CAVA Group, and Yum China go up and down completely randomly.
Pair Corralation between CAVA Group, and Yum China
Given the investment horizon of 90 days CAVA Group, is expected to generate 1.0 times more return on investment than Yum China. However, CAVA Group, is 1.0 times less risky than Yum China. It trades about 0.1 of its potential returns per unit of risk. Yum China Holdings is currently generating about 0.09 per unit of risk. If you would invest 13,382 in CAVA Group, on August 31, 2024 and sell it today you would earn a total of 708.00 from holding CAVA Group, or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAVA Group, vs. Yum China Holdings
Performance |
| Timeline |
| CAVA Group, |
| Yum China Holdings |
CAVA Group, and Yum China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAVA Group, and Yum China
The main advantage of trading using opposite CAVA Group, and Yum China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAVA Group, position performs unexpectedly, Yum China 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 China will offset losses from the drop in Yum China's long position.| CAVA Group, vs. RLJ Lodging Trust | CAVA Group, vs. Aquagold International | CAVA Group, vs. Stepstone Group | CAVA Group, vs. Morningstar Unconstrained Allocation |
| Yum China vs. RLJ Lodging Trust | Yum China vs. Aquagold International | Yum China vs. Stepstone Group | Yum China vs. Morningstar Unconstrained Allocation |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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