Correlation Between Trupanion and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Trupanion 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 Trupanion and Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trupanion and Yum Brands, you can compare the effects of market volatilities on Trupanion 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 Trupanion with a short position of Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trupanion and Yum Brands.
Diversification Opportunities for Trupanion and Yum Brands
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Trupanion and Yum is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Trupanion and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and Trupanion 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 Trupanion 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 Trupanion i.e., Trupanion and Yum Brands go up and down completely randomly.
Pair Corralation between Trupanion and Yum Brands
Given the investment horizon of 90 days Trupanion is expected to generate 4.02 times more return on investment than Yum Brands. However, Trupanion is 4.02 times more volatile than Yum Brands. It trades about 0.16 of its potential returns per unit of risk. Yum Brands is currently generating about 0.03 per unit of risk. If you would invest 2,251 in Trupanion on September 3, 2024 and sell it today you would earn a total of 3,080 from holding Trupanion or generate 136.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trupanion vs. Yum Brands
Performance |
| Timeline |
| Trupanion |
| Yum Brands |
Trupanion and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trupanion and Yum Brands
The main advantage of trading using opposite Trupanion and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trupanion 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.| Trupanion vs. First American | Trupanion vs. Assurant | Trupanion vs. NMI Holdings | Trupanion vs. MGIC Investment Corp |
| Yum Brands vs. Highway Holdings Limited | Yum Brands vs. QCR Holdings | Yum Brands vs. Partner Communications | Yum Brands vs. Acumen Pharmaceuticals |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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