Correlation Between Yum Brands and Kura Sushi
Can any of the company-specific risk be diversified away by investing in both Yum Brands and Kura Sushi 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 Kura Sushi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and Kura Sushi USA, you can compare the effects of market volatilities on Yum Brands and Kura Sushi 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 Kura Sushi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Kura Sushi.
Diversification Opportunities for Yum Brands and Kura Sushi
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yum and Kura is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Kura Sushi USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi USA 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 Kura Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Sushi USA has no effect on the direction of Yum Brands i.e., Yum Brands and Kura Sushi go up and down completely randomly.
Pair Corralation between Yum Brands and Kura Sushi
Considering the 90-day investment horizon Yum Brands is expected to generate 0.28 times more return on investment than Kura Sushi. However, Yum Brands is 3.57 times less risky than Kura Sushi. It trades about -0.3 of its potential returns per unit of risk. Kura Sushi USA is currently generating about -0.23 per unit of risk. If you would invest 13,386 in Yum Brands on October 23, 2024 and sell it today you would lose (854.00) from holding Yum Brands or give up 6.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yum Brands vs. Kura Sushi USA
Performance |
| Timeline |
| Yum Brands |
| Kura Sushi USA |
Yum Brands and Kura Sushi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and Kura Sushi
The main advantage of trading using opposite Yum Brands and Kura Sushi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, Kura Sushi 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 Kura Sushi will offset losses from the drop in Kura Sushi's long position.| Yum Brands vs. Shake Shack | Yum Brands vs. Papa Johns International | Yum Brands vs. Dominos Pizza Common | Yum Brands vs. Jack In The |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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