Correlation Between Yum Brands and Old Republic
Can any of the company-specific risk be diversified away by investing in both Yum Brands and Old Republic 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 Old Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and Old Republic International, you can compare the effects of market volatilities on Yum Brands and Old Republic 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 Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Old Republic.
Diversification Opportunities for Yum Brands and Old Republic
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yum and Old is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of Yum Brands i.e., Yum Brands and Old Republic go up and down completely randomly.
Pair Corralation between Yum Brands and Old Republic
Considering the 90-day investment horizon Yum Brands is expected to generate 7.12 times less return on investment than Old Republic. But when comparing it to its historical volatility, Yum Brands is 1.36 times less risky than Old Republic. It trades about 0.04 of its potential returns per unit of risk. Old Republic International is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,533 in Old Republic International on September 3, 2024 and sell it today you would earn a total of 364.00 from holding Old Republic International or generate 10.3% 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. Old Republic International
Performance |
| Timeline |
| Yum Brands |
| Old Republic Interna |
Yum Brands and Old Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and Old Republic
The main advantage of trading using opposite Yum Brands and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic's long position.| Yum Brands vs. Highway Holdings Limited | Yum Brands vs. QCR Holdings | Yum Brands vs. Partner Communications | Yum Brands vs. Acumen Pharmaceuticals |
| Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
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 Stocks Directory module to find actively traded stocks across global markets.
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