Correlation Between Youdao and Bloomin Brands
Can any of the company-specific risk be diversified away by investing in both Youdao and Bloomin 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 Youdao and Bloomin Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Youdao Inc and Bloomin Brands, you can compare the effects of market volatilities on Youdao and Bloomin 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 Youdao with a short position of Bloomin Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youdao and Bloomin Brands.
Diversification Opportunities for Youdao and Bloomin Brands
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Youdao and Bloomin is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Youdao Inc and Bloomin Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomin Brands and Youdao 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 Youdao Inc are associated (or correlated) with Bloomin Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomin Brands has no effect on the direction of Youdao i.e., Youdao and Bloomin Brands go up and down completely randomly.
Pair Corralation between Youdao and Bloomin Brands
Considering the 90-day investment horizon Youdao Inc is expected to generate 1.69 times more return on investment than Bloomin Brands. However, Youdao is 1.69 times more volatile than Bloomin Brands. It trades about 0.09 of its potential returns per unit of risk. Bloomin Brands is currently generating about -0.07 per unit of risk. If you would invest 359.00 in Youdao Inc on November 9, 2024 and sell it today you would earn a total of 445.00 from holding Youdao Inc or generate 123.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youdao Inc vs. Bloomin Brands
Performance |
| Timeline |
| Youdao Inc |
| Bloomin Brands |
Youdao and Bloomin Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youdao and Bloomin Brands
The main advantage of trading using opposite Youdao and Bloomin Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youdao position performs unexpectedly, Bloomin 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 Bloomin Brands will offset losses from the drop in Bloomin Brands' long position.| Youdao vs. Gaotu Techedu DRC | Youdao vs. TAL Education Group | Youdao vs. Strategic Education | Youdao vs. Vasta Platform |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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