Correlation Between Yum Brands and SunOpta
Can any of the company-specific risk be diversified away by investing in both Yum Brands and SunOpta 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 SunOpta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and SunOpta, you can compare the effects of market volatilities on Yum Brands and SunOpta 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 SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and SunOpta.
Diversification Opportunities for Yum Brands and SunOpta
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yum and SunOpta is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Yum Brands i.e., Yum Brands and SunOpta go up and down completely randomly.
Pair Corralation between Yum Brands and SunOpta
Considering the 90-day investment horizon Yum Brands is expected to generate 2.73 times less return on investment than SunOpta. But when comparing it to its historical volatility, Yum Brands is 2.14 times less risky than SunOpta. It trades about 0.23 of its potential returns per unit of risk. SunOpta is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 680.00 in SunOpta on September 2, 2024 and sell it today you would earn a total of 95.00 from holding SunOpta or generate 13.97% 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. SunOpta
Performance |
| Timeline |
| Yum Brands |
| SunOpta |
Yum Brands and SunOpta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and SunOpta
The main advantage of trading using opposite Yum Brands and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, SunOpta 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 SunOpta will offset losses from the drop in SunOpta's long position.The idea behind Yum Brands and SunOpta pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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