Correlation Between Bank of America and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and Tyson Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Tyson Foods, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Tyson Foods.
Diversification Opportunities for Bank of America and Tyson Foods
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Tyson is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and Bank of America 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 Bank of America 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 Bank of America i.e., Bank of America and Tyson Foods go up and down completely randomly.
Pair Corralation between Bank of America and Tyson Foods
Assuming the 90 days trading horizon Bank of America is expected to generate 0.66 times more return on investment than Tyson Foods. However, Bank of America is 1.51 times less risky than Tyson Foods. It trades about 0.06 of its potential returns per unit of risk. Tyson Foods is currently generating about 0.04 per unit of risk. If you would invest 4,517 in Bank of America on August 27, 2024 and sell it today you would earn a total of 2,324 from holding Bank of America or generate 51.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 73.46% |
| Values | Daily Returns |
Bank of America vs. Tyson Foods
Performance |
| Timeline |
| Bank of America |
| Tyson Foods |
Bank of America and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Tyson Foods
The main advantage of trading using opposite Bank of America and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. MAHLE Metal Leve | Bank of America vs. Metalurgica Gerdau SA | Bank of America vs. Cognizant Technology Solutions | Bank of America vs. Align Technology |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |