Correlation Between Smart Share and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Smart Share 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 Smart Share and Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Share Global and Yum Brands, you can compare the effects of market volatilities on Smart Share 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 Smart Share with a short position of Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Share and Yum Brands.
Diversification Opportunities for Smart Share and Yum Brands
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smart and Yum is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Smart Share Global and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and Smart Share 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 Smart Share Global 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 Smart Share i.e., Smart Share and Yum Brands go up and down completely randomly.
Pair Corralation between Smart Share and Yum Brands
Allowing for the 90-day total investment horizon Smart Share Global is expected to generate 2.33 times more return on investment than Yum Brands. However, Smart Share is 2.33 times more volatile than Yum Brands. It trades about 0.34 of its potential returns per unit of risk. Yum Brands is currently generating about 0.09 per unit of risk. If you would invest 65.00 in Smart Share Global on September 12, 2024 and sell it today you would earn a total of 11.00 from holding Smart Share Global or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smart Share Global vs. Yum Brands
Performance |
| Timeline |
| Smart Share Global |
| Yum Brands |
Smart Share and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart Share and Yum Brands
The main advantage of trading using opposite Smart Share and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Share 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.| Smart Share vs. Frontdoor | Smart Share vs. Bright Horizons Family | Smart Share vs. Mister Car Wash | Smart Share vs. Carriage Services |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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