Correlation Between Clean Power and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Clean Power 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 Clean Power and Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Power Hydrogen and Yum Brands, you can compare the effects of market volatilities on Clean Power 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 Clean Power with a short position of Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Power and Yum Brands.
Diversification Opportunities for Clean Power and Yum Brands
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Clean and Yum is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Clean Power Hydrogen and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and Clean Power 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 Clean Power Hydrogen 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 Clean Power i.e., Clean Power and Yum Brands go up and down completely randomly.
Pair Corralation between Clean Power and Yum Brands
Assuming the 90 days trading horizon Clean Power Hydrogen is expected to generate 3.77 times more return on investment than Yum Brands. However, Clean Power is 3.77 times more volatile than Yum Brands. It trades about 0.02 of its potential returns per unit of risk. Yum Brands is currently generating about -0.07 per unit of risk. If you would invest 775.00 in Clean Power Hydrogen on October 26, 2024 and sell it today you would earn a total of 5.00 from holding Clean Power Hydrogen or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Clean Power Hydrogen vs. Yum Brands
Performance |
| Timeline |
| Clean Power Hydrogen |
| Yum Brands |
Clean Power and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Power and Yum Brands
The main advantage of trading using opposite Clean Power and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Power 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.| Clean Power vs. InterContinental Hotels Group | Clean Power vs. Wyndham Hotels Resorts | Clean Power vs. Spirent Communications plc | Clean Power vs. Sligro Food Group |
| Yum Brands vs. Empire Metals Limited | Yum Brands vs. Eastinco Mining Exploration | Yum Brands vs. AfriTin Mining | Yum Brands vs. Coeur Mining |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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