Correlation Between Yum Brands and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both Yum Brands and Hyatt Hotels 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 Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and Hyatt Hotels, you can compare the effects of market volatilities on Yum Brands and Hyatt Hotels 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 Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Hyatt Hotels.
Diversification Opportunities for Yum Brands and Hyatt Hotels
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yum and Hyatt is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels 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 Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of Yum Brands i.e., Yum Brands and Hyatt Hotels go up and down completely randomly.
Pair Corralation between Yum Brands and Hyatt Hotels
Considering the 90-day investment horizon Yum Brands is expected to generate 3.78 times less return on investment than Hyatt Hotels. But when comparing it to its historical volatility, Yum Brands is 1.86 times less risky than Hyatt Hotels. It trades about 0.02 of its potential returns per unit of risk. Hyatt Hotels is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 14,718 in Hyatt Hotels on September 12, 2024 and sell it today you would earn a total of 1,204 from holding Hyatt Hotels or generate 8.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yum Brands vs. Hyatt Hotels
Performance |
| Timeline |
| Yum Brands |
| Hyatt Hotels |
Yum Brands and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and Hyatt Hotels
The main advantage of trading using opposite Yum Brands and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, Hyatt Hotels 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 Hyatt Hotels will offset losses from the drop in Hyatt Hotels' long position.| Yum Brands vs. Noble Romans | Yum Brands vs. Good Times Restaurants | Yum Brands vs. Flanigans Enterprises | Yum Brands vs. FAT Brands |
| Hyatt Hotels vs. InterContinental Hotels Group | Hyatt Hotels vs. Hilton Worldwide Holdings | Hyatt Hotels vs. Marriott International | Hyatt Hotels vs. Choice Hotels International |
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.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |