Correlation Between Tyson Foods and European Metals
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and European Metals 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 European Metals 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 European Metals Holdings, you can compare the effects of market volatilities on Tyson Foods and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and European Metals.
Diversification Opportunities for Tyson Foods and European Metals
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tyson and European is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods Cl and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Tyson Foods i.e., Tyson Foods and European Metals go up and down completely randomly.
Pair Corralation between Tyson Foods and European Metals
Assuming the 90 days trading horizon Tyson Foods Cl is expected to generate 0.43 times more return on investment than European Metals. However, Tyson Foods Cl is 2.32 times less risky than European Metals. It trades about 0.0 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.06 per unit of risk. If you would invest 5,963 in Tyson Foods Cl on October 11, 2024 and sell it today you would lose (434.00) from holding Tyson Foods Cl or give up 7.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Tyson Foods Cl vs. European Metals Holdings
Performance |
| Timeline |
| Tyson Foods Cl |
| European Metals Holdings |
Tyson Foods and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and European Metals
The main advantage of trading using opposite Tyson Foods and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Tyson Foods vs. Micron Technology | Tyson Foods vs. Sunny Optical Technology | Tyson Foods vs. Polar Capital Technology | Tyson Foods vs. Odfjell Drilling |
| European Metals vs. Tyson Foods Cl | European Metals vs. Datagroup SE | European Metals vs. First Class Metals | European Metals vs. Dairy Farm International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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