Correlation Between Tyson Foods and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and Scandinavian Tobacco 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 Tyson Foods and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods Cl and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Tyson Foods and Scandinavian Tobacco 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 Tyson Foods with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and Scandinavian Tobacco.
Diversification Opportunities for Tyson Foods and Scandinavian Tobacco
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tyson and Scandinavian is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods Cl and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Tyson Foods 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 Tyson Foods Cl are associated (or correlated) with Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Tyson Foods i.e., Tyson Foods and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Tyson Foods and Scandinavian Tobacco
Assuming the 90 days trading horizon Tyson Foods Cl is expected to generate 0.97 times more return on investment than Scandinavian Tobacco. However, Tyson Foods Cl is 1.03 times less risky than Scandinavian Tobacco. It trades about 0.25 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.08 per unit of risk. If you would invest 5,833 in Tyson Foods Cl on August 30, 2024 and sell it today you would earn a total of 590.00 from holding Tyson Foods Cl or generate 10.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tyson Foods Cl vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Tyson Foods Cl |
| Scandinavian Tobacco |
Tyson Foods and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and Scandinavian Tobacco
The main advantage of trading using opposite Tyson Foods and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Tyson Foods vs. Lendinvest PLC | Tyson Foods vs. Neometals | Tyson Foods vs. Albion Technology General | Tyson Foods vs. Jupiter Fund Management |
| Scandinavian Tobacco vs. Lendinvest PLC | Scandinavian Tobacco vs. Neometals | Scandinavian Tobacco vs. Albion Technology General | Scandinavian Tobacco vs. Jupiter Fund Management |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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