Correlation Between EMCOR and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both EMCOR 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 EMCOR and Tyson Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and Tyson Foods, you can compare the effects of market volatilities on EMCOR 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 EMCOR with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Tyson Foods.
Diversification Opportunities for EMCOR and Tyson Foods
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EMCOR and Tyson is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and EMCOR 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 EMCOR Group 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 EMCOR i.e., EMCOR and Tyson Foods go up and down completely randomly.
Pair Corralation between EMCOR and Tyson Foods
Considering the 90-day investment horizon EMCOR Group is expected to generate 3.24 times more return on investment than Tyson Foods. However, EMCOR is 3.24 times more volatile than Tyson Foods. It trades about 0.0 of its potential returns per unit of risk. Tyson Foods is currently generating about -0.09 per unit of risk. If you would invest 45,740 in EMCOR Group on November 3, 2024 and sell it today you would lose (934.00) from holding EMCOR Group or give up 2.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMCOR Group vs. Tyson Foods
Performance |
| Timeline |
| EMCOR Group |
| Tyson Foods |
EMCOR and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and Tyson Foods
The main advantage of trading using opposite EMCOR and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR 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.The idea behind EMCOR Group and Tyson Foods 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.| Tyson Foods vs. Bunge Limited | Tyson Foods vs. Cal Maine Foods | Tyson Foods vs. Dole PLC | Tyson Foods vs. Adecoagro SA |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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