Correlation Between Western Asset and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Tyson Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Investment and Tyson Foods, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Tyson Foods.
Diversification Opportunities for Western Asset and Tyson Foods
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and Tyson is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and Western Asset 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 Western Asset Investment 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 Western Asset i.e., Western Asset and Tyson Foods go up and down completely randomly.
Pair Corralation between Western Asset and Tyson Foods
Considering the 90-day investment horizon Western Asset Investment is expected to under-perform the Tyson Foods. But the stock apears to be less risky and, when comparing its historical volatility, Western Asset Investment is 3.33 times less risky than Tyson Foods. The stock trades about -0.1 of its potential returns per unit of risk. The Tyson Foods is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5,920 in Tyson Foods on August 28, 2024 and sell it today you would earn a total of 458.00 from holding Tyson Foods or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Investment vs. Tyson Foods
Performance |
| Timeline |
| Western Asset Investment |
| Tyson Foods |
Western Asset and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Tyson Foods
The main advantage of trading using opposite Western Asset and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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