Correlation Between SNDL and Yum Brands
Can any of the company-specific risk be diversified away by investing in both SNDL 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 SNDL and Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and Yum Brands, you can compare the effects of market volatilities on SNDL 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 SNDL with a short position of Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and Yum Brands.
Diversification Opportunities for SNDL and Yum Brands
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SNDL and Yum is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and SNDL 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 SNDL Inc 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 SNDL i.e., SNDL and Yum Brands go up and down completely randomly.
Pair Corralation between SNDL and Yum Brands
Given the investment horizon of 90 days SNDL Inc is expected to under-perform the Yum Brands. In addition to that, SNDL is 3.74 times more volatile than Yum Brands. It trades about -0.08 of its total potential returns per unit of risk. Yum Brands is currently generating about 0.19 per unit of volatility. If you would invest 13,339 in Yum Brands on August 31, 2024 and sell it today you would earn a total of 594.00 from holding Yum Brands or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNDL Inc vs. Yum Brands
Performance |
| Timeline |
| SNDL Inc |
| Yum Brands |
SNDL and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and Yum Brands
The main advantage of trading using opposite SNDL and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL 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.The idea behind SNDL Inc and Yum Brands pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Yum Brands vs. Shake Shack | Yum Brands vs. Papa Johns International | Yum Brands vs. Dominos Pizza | Yum Brands vs. Jack In The |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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