Correlation Between PureTech Health and Yum Brands
Can any of the company-specific risk be diversified away by investing in both PureTech Health 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 PureTech Health and Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureTech Health plc and Yum Brands, you can compare the effects of market volatilities on PureTech Health 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 PureTech Health with a short position of Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Yum Brands.
Diversification Opportunities for PureTech Health and Yum Brands
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PureTech and Yum is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and PureTech Health 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 PureTech Health plc 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 PureTech Health i.e., PureTech Health and Yum Brands go up and down completely randomly.
Pair Corralation between PureTech Health and Yum Brands
Assuming the 90 days trading horizon PureTech Health plc is expected to generate 1.74 times more return on investment than Yum Brands. However, PureTech Health is 1.74 times more volatile than Yum Brands. It trades about 0.15 of its potential returns per unit of risk. Yum Brands is currently generating about 0.08 per unit of risk. If you would invest 15,240 in PureTech Health plc on August 28, 2024 and sell it today you would earn a total of 1,320 from holding PureTech Health plc or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PureTech Health plc vs. Yum Brands
Performance |
| Timeline |
| PureTech Health plc |
| Yum Brands |
PureTech Health and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PureTech Health and Yum Brands
The main advantage of trading using opposite PureTech Health and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health 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.| PureTech Health vs. Hyundai Motor | PureTech Health vs. Toyota Motor Corp | PureTech Health vs. SoftBank Group Corp | PureTech Health vs. Halyk Bank of |
| Yum Brands vs. PureTech Health plc | Yum Brands vs. GlobalData PLC | Yum Brands vs. Sunny Optical Technology | Yum Brands vs. Accsys Technologies PLC |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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