Correlation Between United Insurance and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both United Insurance and Tyson Foods 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 United Insurance and Tyson Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance Holdings and Tyson Foods, you can compare the effects of market volatilities on United Insurance and Tyson Foods 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 United Insurance with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Tyson Foods.
Diversification Opportunities for United Insurance and Tyson Foods
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Tyson is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and United Insurance 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 United Insurance Holdings are associated (or correlated) with Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of United Insurance i.e., United Insurance and Tyson Foods go up and down completely randomly.
Pair Corralation between United Insurance and Tyson Foods
Assuming the 90 days horizon United Insurance Holdings is expected to generate 1.64 times more return on investment than Tyson Foods. However, United Insurance is 1.64 times more volatile than Tyson Foods. It trades about 0.03 of its potential returns per unit of risk. Tyson Foods is currently generating about -0.18 per unit of risk. If you would invest 1,171 in United Insurance Holdings on October 19, 2024 and sell it today you would earn a total of 19.00 from holding United Insurance Holdings or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. Tyson Foods
Performance |
| Timeline |
| United Insurance Holdings |
| Tyson Foods |
United Insurance and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Tyson Foods
The main advantage of trading using opposite United Insurance and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Tyson Foods 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 Tyson Foods will offset losses from the drop in Tyson Foods' long position.| United Insurance vs. MidCap Financial Investment | United Insurance vs. Apollo Investment Corp | United Insurance vs. PULSION Medical Systems | United Insurance vs. DIVERSIFIED ROYALTY |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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