Correlation Between Yum Brands and Canterbury Park

Can any of the company-specific risk be diversified away by investing in both Yum Brands and Canterbury Park 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 Canterbury Park into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yum Brands and Canterbury Park Holding, you can compare the effects of market volatilities on Yum Brands and Canterbury Park 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 Canterbury Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Canterbury Park.

Diversification Opportunities for Yum Brands and Canterbury Park

0.39

Correlation Coefficient

Yum Brands  Canterbury Park

Weak diversification

The 3 months correlation between Yum and Canterbury is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Canterbury Park Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canterbury Park Holding 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 Canterbury Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canterbury Park Holding has no effect on the direction of Yum Brands i.e., Yum Brands and Canterbury Park go up and down completely randomly.

Pair Corralation between Yum Brands and Canterbury Park

Considering the 90-day investment horizon Yum Brands is expected to generate 7.17 times less return on investment than Canterbury Park. But when comparing it to its historical volatility, Yum Brands is 2.43 times less risky than Canterbury Park. It trades about 0.03 of its potential returns per unit of risk. Canterbury Park Holding is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,823  in Canterbury Park Holding on September 23, 2024 and sell it today you would earn a total of  266.00  from holding Canterbury Park Holding or generate 14.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.31%
Values	Daily Returns

Yum Brands  vs.  Canterbury Park Holding

Yum Brands

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yum Brands are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Yum Brands is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Canterbury Park Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canterbury Park Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Canterbury Park exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yum Brands and Canterbury Park

The main advantage of trading using opposite Yum Brands and Canterbury Park positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, Canterbury Park 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 Canterbury Park will offset losses from the drop in Canterbury Park's long position.

The idea behind Yum Brands and Canterbury Park Holding 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.

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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.