Correlation Between FAT Brands and Yum Brands
Can any of the company-specific risk be diversified away by investing in both FAT Brands 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 FAT Brands and Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and Yum Brands, you can compare the effects of market volatilities on FAT Brands 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 FAT Brands with a short position of Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Yum Brands.
Diversification Opportunities for FAT Brands and Yum Brands
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FAT and Yum is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and FAT Brands 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 FAT Brands 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 FAT Brands i.e., FAT Brands and Yum Brands go up and down completely randomly.
Pair Corralation between FAT Brands and Yum Brands
Assuming the 90 days horizon FAT Brands is expected to generate 13.92 times less return on investment than Yum Brands. In addition to that, FAT Brands is 4.43 times more volatile than Yum Brands. It trades about 0.0 of its total potential returns per unit of risk. Yum Brands is currently generating about 0.02 per unit of volatility. If you would invest 13,197 in Yum Brands on September 12, 2024 and sell it today you would earn a total of 625.00 from holding Yum Brands or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAT Brands vs. Yum Brands
Performance |
| Timeline |
| FAT Brands |
| Yum Brands |
FAT Brands and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and Yum Brands
The main advantage of trading using opposite FAT Brands and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands 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.| FAT Brands vs. Noble Romans | FAT Brands vs. Good Times Restaurants | FAT Brands vs. Flanigans Enterprises | FAT Brands vs. El Pollo Loco |
| Yum Brands vs. Noble Romans | Yum Brands vs. Good Times Restaurants | Yum Brands vs. Flanigans Enterprises | Yum Brands vs. FAT Brands |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |