Correlation Between Yum Brands and SNDL
Can any of the company-specific risk be diversified away by investing in both Yum Brands and SNDL 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 SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and SNDL Inc, you can compare the effects of market volatilities on Yum Brands and SNDL 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 SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and SNDL.
Diversification Opportunities for Yum Brands and SNDL
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yum and SNDL is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Yum Brands i.e., Yum Brands and SNDL go up and down completely randomly.
Pair Corralation between Yum Brands and SNDL
Considering the 90-day investment horizon Yum Brands is expected to generate 0.27 times more return on investment than SNDL. However, Yum Brands is 3.74 times less risky than SNDL. It trades about 0.19 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.08 per unit of risk. If you would invest 13,339 in Yum Brands on August 31, 2024 and sell it today you would earn a total of 594.00 from holding Yum Brands or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yum Brands vs. SNDL Inc
Performance |
| Timeline |
| Yum Brands |
| SNDL Inc |
Yum Brands and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and SNDL
The main advantage of trading using opposite Yum Brands and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, SNDL 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 SNDL will offset losses from the drop in SNDL's long position.| Yum Brands vs. Shake Shack | Yum Brands vs. Papa Johns International | Yum Brands vs. Dominos Pizza | Yum Brands vs. Jack In The |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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