Correlation Between Yum Brands and Avient Corp
Can any of the company-specific risk be diversified away by investing in both Yum Brands and Avient Corp 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 Avient Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and Avient Corp, you can compare the effects of market volatilities on Yum Brands and Avient Corp 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 Avient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Avient Corp.
Diversification Opportunities for Yum Brands and Avient Corp
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yum and Avient is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp 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 Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of Yum Brands i.e., Yum Brands and Avient Corp go up and down completely randomly.
Pair Corralation between Yum Brands and Avient Corp
Considering the 90-day investment horizon Yum Brands is expected to generate 5.08 times less return on investment than Avient Corp. But when comparing it to its historical volatility, Yum Brands is 1.86 times less risky than Avient Corp. It trades about 0.04 of its potential returns per unit of risk. Avient Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,334 in Avient Corp on August 24, 2024 and sell it today you would earn a total of 1,783 from holding Avient Corp or generate 53.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yum Brands vs. Avient Corp
Performance |
| Timeline |
| Yum Brands |
| Avient Corp |
Yum Brands and Avient Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and Avient Corp
The main advantage of trading using opposite Yum Brands and Avient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, Avient Corp 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 Avient Corp will offset losses from the drop in Avient Corp's long position.| Yum Brands vs. Chipotle Mexican Grill | Yum Brands vs. Eshallgo Class A | Yum Brands vs. Amtech Systems | Yum Brands vs. Gold Fields Ltd |
| Avient Corp vs. Axalta Coating Systems | Avient Corp vs. H B Fuller | Avient Corp vs. Quaker Chemical | Avient Corp vs. Cabot |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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