Correlation Between Yum Brands and Lion One
Can any of the company-specific risk be diversified away by investing in both Yum Brands and Lion One 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 Yum Brands and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and Lion One Metals, you can compare the effects of market volatilities on Yum Brands and Lion One 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 Yum Brands with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Lion One.
Diversification Opportunities for Yum Brands and Lion One
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yum and Lion is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals and Yum 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 Yum Brands are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Yum Brands i.e., Yum Brands and Lion One go up and down completely randomly.
Pair Corralation between Yum Brands and Lion One
Assuming the 90 days horizon Yum Brands is expected to generate 0.26 times more return on investment than Lion One. However, Yum Brands is 3.92 times less risky than Lion One. It trades about 0.03 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.03 per unit of risk. If you would invest 11,862 in Yum Brands on September 3, 2024 and sell it today you would earn a total of 1,423 from holding Yum Brands or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yum Brands vs. Lion One Metals
Performance |
| Timeline |
| Yum Brands |
| Lion One Metals |
Yum Brands and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and Lion One
The main advantage of trading using opposite Yum Brands and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Yum Brands vs. Lion One Metals | Yum Brands vs. SCIENCE IN SPORT | Yum Brands vs. Transport International Holdings | Yum Brands vs. PARKEN Sport Entertainment |
| Lion One vs. Cars Inc | Lion One vs. Chunghwa Telecom Co | Lion One vs. United Internet AG | Lion One vs. JAPAN TOBACCO UNSPADR12 |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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